Selling and equity split after a break u

getmore4less

Sleazy wrote: »

Another way of looking at it (and probably fairer from your ex's viewpoint) is that he put 62.5% of the deposit down, you put 37.5% down and everything else was shared equally. Once sold, it would seem reasonable for him therefore to receive 62.5% of the proceeds and you 37.5%.

Whether or not you can afford to buy on your own or not is your problem, not his.

The Legal situation may be different, but just stating what seems fair and reasonable (why should you benefit from his larger deposit)? If he invested more money in the stock market than you, his gain (or loss) would be greater than yours. Fortunately your house has increased in value, so you both gain - he more than you.

Not a fare way to do it.

Deposits of £1 &£0 mean one person gets everything.

Service debt you own that equity.

Just pretend they paid cash and borrowed separately.

Mort123

No- ironically, I am now in a stronger financial position than him and have paid upfront for some of the refurbishment works he could afford, and he paid back his share over time.

silvercar

getmore4less wrote: »

if you have paid everything else 50:50 then the 2 basic ways to do it are

A.get your money back split equity 50:50
B. full equity based shares less your share of the debt

do the numbers and see what rage you have.

I will do an example you can do it with real numbers.

£200k property(purchase price all fees and the bathroom)

deposit 1. 50k 2. £30k mortgage 120k == £60k each

mortgage now £110k £55k each

Value now £240k

A. get your money back
£240k -£80 - £110 = £50
1. £50k + £25k=£75k
2. £30k + £25k = £55k

B Equity less share of the debt.

1. £50k + £60k = £110k = 55%
2. £30k + £60k = £90k = 45%

1. £240k*0.55 - £55k = £77k
2. £240k*.45 - £55k = £53k

Mort123 wrote: »

What would you suggest as an alternative? I'm finding it all a little tricky to get my head round.

I agree with the earlier poster. Only fair to acknowledge the higher deposit and the equal servicing of the debt.

saajan_12

I look at the extremes to judge what method is fair. Imagine on a £200k house, A put down the full deposit £100k and B paid off the full mortgage over time.
- Going by deposits, A should get 100% of proceeds
- Going by mortgage split, B should get 100% of proceeds.

Neither of these seem fair. B would have paid more total due to interest, but A had the money upfront which was necessary to secure the mortgage. But the 'value' of this is precisely the interest which A didn't have to pay. B essentially contributed £100k at the start via a mortgage.

In your situation, since you serviced the mortgage equally, you can think of it as 2 separate mortgages.

You bought 'your part' of the house with your deposit + half mortgage. Your ex bought 'the rest' with their deposit + half mortgage. These values total to the purchase price of the house, so you each 'own' that percentage of the house now, along with any capital gain/loss.
Say purchase price was 200k so total mortgage was 120k

You 'own' (30k deposit + 60k mortgage) / 200k = 45%
Ex 'owns' (50k deposit + 60k mortgage) / 200k = 55%

You each have to pay off half the remaining mortgage from your shares. Note if half the remaining mortgage was higher than one person's share, the mortgage company don't care, they'll take their part and you have to sort out who owes who later.

steph2901

I think both should get their deposit back and then split 50/50 as both been paying equally. That seems fair to me.

TBagpuss

one option is to look at how your deposits have appreciated. SO, suppose the hosue cost you £200K and is now worth £300K:

You: Initial deposit £30K = 15% of original purchase price. Get back £45K (15% of current value)
Him: Initial Deposit £50K = 25% of original purchase price. Get back £75K (25% of current value)
Remaining equity split equally.

Mort123

I was thinking along these lines.

My argument would be that if they take 60% of the total increase in value, they are benefitting from the hundreds of thousands of pounds the bank loaned us that has nothing to do with the initial deposit he put in.

So if we are looking at the capital gain as in two sections, one quarter which comes from our equity and 3/4 from the loan we took from the bank, of the portion we own, he gets 60% I get 40%, and of the rest, we split the increase in value 50:50

getmore4less

steph2901 wrote: »

I think both should get their deposit back and then split 50/50 as both been paying equally. That seems fair to me.

that is not an equitable way to do it

£200k house £100k deposit from one person and 50:50 mortgage on the other £100k

house goes up to £300k mortgage paid off.

split is £200 £100

pay cash because you borrowed £50k each on credit cards

split now becomes £225k and £75k

The only difference is where you borrowed the money.


Deposit back is equivalent to an interest free loan to the other party with the smaller deposit.

Mort123

I can see that. What would your ideal fair scenario be?

Mort123

Sorry, I just realised you are a previous poster and have written this already.