How to split a mortgage

getmore4less

scoops82 wrote: »

We split the mortgage and households bills 65-35.


I was hoping we would be able to do something like


Example

Sale price £100K
Deposit Paid (10%) 10k back to me
Remaining value split 65-35


This is starting to sound a tad messy - what is the best solution? Does anyone know how much it would cost to draw this up a t a solicitors

First you need to uderstand the basics(which if you are in accountancy should come easy)

Create a model and work through use cases with various senarios if you can't document something that works for all senarioes you are doing it wrong.

The get your money back is the same as an interest free loan to the other party.

Proper equitable shares are based on what money or debt you are servicing.


If you start changing the amount of new cash that effects equity like you pay for improvments it gets very messy to model properly.

Modeling the debt payments is much easier but still a job if you start putting in unequal amounts to the agreed initial split.

scoops82

If we kept a record of all purchases that relate to the house refurbishment and mortgage/bill payments then if the worse came to the worse and we did separate could we not just tally up then the agreed percentage - making a final adjustment based on the latest figure?


I know that might seem confusing but if its all agreed that is what action we would take I don't see the issue - i'm assuming that its legal.


Although the GF is not on the deeds, if I left the house in the will to her and she would receive my pension pay-out in the event of death would she not be allowed to clear the mortgage using those funds and then have the deeds transferred into her name?


At some point we will get her name put on the deeds but with her past credit history we will be paying silly interest rates until that improves.

Mojisola

scoops82 wrote: »

If we kept a record of all purchases that relate to the house refurbishment and mortgage/bill payments then if the worse came to the worse and we did separate could we not just tally up then the agreed percentage - making a final adjustment based on the latest figure?

If the two of you split up, you could give whatever you wanted to your GF. There's no law stopping you.

The only problem would be if the break-up isn't amicable - under the current arrangement you don't have to give anything to her. She would have to go to court to prove that she had a right to a share of the house.

Thrugelmir

scoops82 wrote: »

Sale price £100K
Deposit Paid (10%) 10k back to me
Remaining value split 65-35


This is starting to sound a tad messy -

Not messy in the slightest. Very straightforward in fact.

getmore4less

scoops82 wrote: »

If we kept a record of all purchases that relate to the house refurbishment and mortgage/bill payments then if the worse came to the worse and we did separate could we not just tally up then the agreed percentage - making a final adjustment based on the latest figure?

I know that might seem confusing but if its all agreed that is what action we would take I don't see the issue - i'm assuming that its legal.
.

Do the numbers you may be suprised by the outcome of your algorithm for certain senarioes.

It is very important to understand the impact of servicing debt, equity and contributions.

Simple example: 1: pays a deposit and 1/2 the mortgage 2: pays 1/2 the mortgage

£120k house, 40k deposit £80k mortgage @ 5% over 229months £500pm

Sells for £200k in 5 years.

A: Pure equity you own the place 80:40

so on sell split £133,333: £66,666 each less 1/2 the outstanding(£64530) mortgage.

1: £101068
2: £34401

B: get your money back split equity 50:50
(£20000 - £64530 - £40000)/2 = £47735
1: £87735
2: £47735

Now each has been paying £250pm for 5 years so £15000 each.

How do you propose that works in another version of splitting?

Tally up £55k £15k thats 75:25 is that of the equity before or after taking off the mortgage and what share does each pay of the mortgage.


Start throwing in some unequal refurb costs or mortgage overpayments then what.

scoops82

Below are what I have included to help calculate the split (I have included all the costs in purchasing the property and the cost of nay work done that will stay with the house - hence the fireplace). This gives me a % of what each element should be. The mortgage is 83% which is split 66/34 at the moment.


Sorry for all the questions but I want to get this right so we are both paying the correct amounts.


Maybe I need to revisit this but I suppose ultimately the split can be what we like as im not legally obliged to give anything so we can just agree it between ourselves. It will become messier when we have both names on the mortgage documents.
£ % House - Purchase Costs (Solicitor) 2,106 0.02 House - Deposit - 6,250 0.04 House - Fireplace 786 0.01 House - Deposit - Loan 6,500 0.05 House - Mortgage 116,045 0.83 Works 7,500 0.05 Total Cost 139,187 1.00

getmore4less

As the OH are contributions are relatively low might be worth looking at you just buying the place on your own with no contributions to the purchase and just share living costs. OH can save any surplus or have some spending money.

Make it clear up front what the plans are, if you want to know why just read the splitting with the OH threads.