Question re: "tenants in common"

jetfighter

I'm looking to purchase a house with my partner and the plan is for us to buy as "tenants in common", as I will be contributing 75% of the deposit and she will be contributing 25%.

We will then be splitting the mortgage payments 50/50 going forward.

I envisage being with my partner for the rest of my life, however things change and if we did split up, or one of us passed away, how would it actually be divided?

As we will have 75% / 25% shares in the property at the time of purchase, but in five years' time we will have had five years of contributing 50% / 50%... so I will technically own less than 75% and she will own more than 25%.

I understand that we can specify on the "tenants in common" documentation that we have contributed specific shares, however how is it all worked out in the event of a break up or death down the line, when the shares have shifted somewhat? It's confusing me!

Madbags

Me and my partner (not married) went to a solicitor and had a "declaration of trust" drawn up. As she footed all the cash towards our deposit.

getmore4less

You are not 75:25 based on the deposits you have to include the debts you are servicing.

Plenty of posts on how to do equity shares properly, death and other exit scenario need some thought.

goodwithsaving

Why not own 50/50 but ring fence the unmatched amount of money you have put in?

E.g. if you put in 30k and she put in 15k....state that after all mortgage debt has been paid that you retain 15k more.

Negative equity or profit would be shared equally and it would be more fair* with day to day living and equal splitting of the bills.

*imo

getmore4less

goodwithsaving wrote: »

Why not own 50/50 but ring fence the unmatched amount of money you have put in?

E.g. if you put in 30k and she put in 15k....state that after all mortgage debt has been paid that you retain 15k more.

Negative equity or profit would be shared equally and it would be more fair* with day to day living and equal splitting of the bills.

*imo

That's just an interest free loan to the smaller deposit person.

goodwithsaving

getmore4less wrote: »

That's just an interest free loan to the smaller deposit person.

If you're looking at it as a money making scheme then perhaps. Or if you're planning on building a future with someone but not wanting to risk your money in the event of something going wrong then it's quite a simple, fair and sensible way of doing it....

Red-Squirrel_2

How much is the deposit as a percentage of the value? If its 25%, then you could say that the first 25% of the future value is to be divided 75/25 and the remaining 75% of the value is 50/50.

I would strongly advise you to have a discussion (if you haven't already) about what will happen when 50/50 payments are no longer possible, sensible or fair at some point in the future. That point will come, unless you both carry on earning exactly the same, neither of you are ever made redundant or have hours cut and you never have any children, so be prepared for it.

getmore4less

goodwithsaving wrote: »

If you're looking at it as a money making scheme then perhaps. Or if you're planning on building a future with someone but not wanting to risk your money in the event of something going wrong then it's quite a simple, fair and sensible way of doing it....

That's the problem, it is not a fair way to do things,

It only sort of look like it works for some numbers when you have lowish deposits, do a proper analysis and understand what is going on equity based shares works for ALL values, the get your money back fails.

Problem is the get you money back does not work for all values.

One person puts down 99%, mortgage 1% paid 50:50. look at how that comes out. for a price drop/rise

Any algorithm should work for all values of deposit and mortgage split.

getmore4less

as Red-S says the exit scenarios(death, parting) and things like can't pay/wont pay need a serious discussion.

how to work overpayments/underpaymnets, improvements/renovation.

These things can be quite straight forward once you understand the equity debt relationship.

Rollinghills

All I can say is that if I had to think that hard about it I would probably not be buying a house with someone.

C_Mababejive

See here
https://www.goldsmithwilliams.co.uk/marketing/your-guide-to-owning-property-together.pdf
Fail to plan,plan to fail...

We all start out with such relationships in good faith and its all hearts,flwers and roses around the door. I have personally witnessed close friends and relatives being shafted by ex partners.

If you are a tenant in common, each partner can bequeath their share of the house to whoever they wish on death.

Imagine this..you both reach retirement age,,your partner dies and her/his share passes to someone else. They want their share,they force the sale of the house and the surviving partner is out on the street.