Seperation of cohabitees - HELP

saajan_12

Guest101 wrote: »

But deposits don't grow?

Nor do capital repayments..

I mean the percentage of the property that the deposit covered at the start. If OP's partner's contribution to capital repayments are treated as a percentage of the property value, which increases in value proportionately to the overall property, then the deposit should be treated the same.

Guest101

saajan_12 wrote: »

Nor do capital repayments..

I mean the percentage of the property that the deposit covered at the start. If OP's partner's contribution to capital repayments are treated as a percentage of the property value, which increases in value proportionately to the overall property, then the deposit should be treated the same.

Perhaps it's me, but I don't get it. We are discounting the deposit as the OPs.


It's a percentage of increased value.

bowlhead99

Guest101 wrote: »

saajan_12 wrote: »

But 20k is the growth in the entire property. Taking 30% of 20k means you're not attributing any growth to the deposit or any capital paid off by OP afterwards.

I would take [30% x 20k x 8.5k/propertyvalue] as partner's share of the growth.

But deposits don't grow?

Why not? The whole property has grown.

A portion of that was financed with a deposit payment (say £25k of £100k house price, we haven't been given the real numbers). A portion was financed with mortgage (say £75k of £100k house price). Both of those two portions (the 25% and the 75%) have become more valuable as the next buyer of the house would just be buying the whole lot, You don't pick and choose which bricks were financed by which method of payment.

If the first 'slice' of the house was paid for entirely by OP as a deposit, and the ex did not pay anything towards that deposit, then there should be no expectation that the ex would benefit from 'the whole' of any house price uplift. Clearly any notional 'buying in' was only done with the part of the house that was initially financed by mortgage and then paid down.

Sounds like the ex has funded a share of the £8k of mortgage principal contributions, so if you wanted to give him some sort of cut, any growth entitlement would either be on his share of the £8k of principal paid off, or his share of the 75% of the house that he helped to finance, but it could never be a 30% share of the growth of 100% of the house (the £20k). And the £20k might be £20k of market value increase but you could only access the increase by selling up which would incur costs such as solicitors and estate agents, so there is no tangible £20k available to carve up.

As the mortgage is a fixed term deal with a penalty to exit early it sounds like there is no money available to 'pay him off' as it would not be economically viable to do that (unless low interest rates now make sense to pay the penalty and get onto a nice lower rate) . So from his point of view the best he can be expecting is an acknowledgement that he helped fund your mortgage payments for five years so you intend to pay those to him once cashflow allows in a few years time, with an uplift to thank him for his investment. For example he paid 30% of £8k mortgage principal and the overall house went up by 20% in value so you will give him 30% of £8k plus 20%. You would be crazy to give him his 30% of £8k plus 30% of the entire house uplift.

(Notwithstanding that the ex has signed a document for the mortgage company saying that they will not be acquiring any property rights in the house!!)

Guest101

bowlhead99 wrote: »

Why not? The whole property has grown.

A portion of that was financed with a deposit payment (say £25k of £100k house price, we haven't been given the real numbers). A portion was financed with mortgage (say £75k of £100k house price). Both of those two portions (the 25% and the 75%) have become more valuable as the next buyer of the house would just be buying the whole lot, You don't pick and choose which bricks were financed by which method of payment.

If the first 'slice' of the house was paid for entirely by OP as a deposit, and the ex did not pay anything towards that deposit, then there should be no expectation that the ex would benefit from 'the whole' of any house price uplift. Clearly any notional 'buying in' was only done with the part of the house that was initially financed by mortgage and then paid down.

Sounds like the ex has funded a share of the £8k of mortgage principal contributions, so if you wanted to give him some sort of cut, any growth entitlement would either be on his share of the £8k of principal paid off, or his share of the 75% of the house that he helped to finance, but it could never be a 30% share of the growth of 100% of the house (the £20k). And the £20k might be £20k of market value increase but you could only access the increase by selling up which would incur costs such as solicitors and estate agents, so there is no tangible £20k available to carve up.

As the mortgage is a fixed term deal with a penalty to exit early it sounds like there is no money available to 'pay him off' as it would not be economically viable to do that (unless low interest rates now make sense to pay the penalty and get onto a nice lower rate) . So from his point of view the best he can be expecting is an acknowledgement that he helped fund your mortgage payments for five years so you intend to pay those to him once cashflow allows in a few years time, with an uplift to thank him for his investment. For example he paid 30% of £8k mortgage principal and the overall house went up by 20% in value so you will give him 30% of £8k plus 20%. You would be crazy to give him his 30% of £8k plus 30% of the entire house uplift.

(Notwithstanding that the ex has signed a document for the mortgage company saying that they will not be acquiring any property rights in the house!!)

Should the house be repossessed.


I don't disagree with your calculations though, it's different I guess depending on each case

16102016

bowlhead99 wrote: »

Why not? The whole property has grown.

A portion of that was financed with a deposit payment (say £25k of £100k house price, we haven't been given the real numbers). A portion was financed with mortgage (say £75k of £100k house price). Both of those two portions (the 25% and the 75%) have become more valuable as the next buyer of the house would just be buying the whole lot, You don't pick and choose which bricks were financed by which method of payment.

If the first 'slice' of the house was paid for entirely by OP as a deposit, and the ex did not pay anything towards that deposit, then there should be no expectation that the ex would benefit from 'the whole' of any house price uplift. Clearly any notional 'buying in' was only done with the part of the house that was initially financed by mortgage and then paid down.

Sounds like the ex has funded a share of the £8k of mortgage principal contributions, so if you wanted to give him some sort of cut, any growth entitlement would either be on his share of the £8k of principal paid off, or his share of the 75% of the house that he helped to finance, but it could never be a 30% share of the growth of 100% of the house (the £20k). And the £20k might be £20k of market value increase but you could only access the increase by selling up which would incur costs such as solicitors and estate agents, so there is no tangible £20k available to carve up.

As the mortgage is a fixed term deal with a penalty to exit early it sounds like there is no money available to 'pay him off' as it would not be economically viable to do that (unless low interest rates now make sense to pay the penalty and get onto a nice lower rate) . So from his point of view the best he can be expecting is an acknowledgement that he helped fund your mortgage payments for five years so you intend to pay those to him once cashflow allows in a few years time, with an uplift to thank him for his investment. For example he paid 30% of £8k mortgage principal and the overall house went up by 20% in value so you will give him 30% of £8k plus 20%. You would be crazy to give him his 30% of £8k plus 30% of the entire house uplift.

(Notwithstanding that the ex has signed a document for the mortgage company saying that they will not be acquiring any property rights in the house!!)

Ok so your saying - if the deposit was say 20% (which i paid all of) - then the ex should only be entitled to the 30% of the remaining 80% of any equity + whatever the ex paid off the capital??

The ex funded £2800 of the £8000 ish paid off the capital

16102016

Also the fixed deal is until June 2019, I DONT want to sell the property, and it would cost me £6.6k to change my fixed rate so not worth it for a lower rate

saajan_12

silvercar wrote: »

30% of 8.2k = £2,500

It is worth now what it was when you bought it, so 20k growth between what you paid and its value now. 30% of 20k = 6k.

Guest101 wrote: »

Perhaps it's me, but I don't get it. We are discounting the deposit as the OPs.

It's a percentage of increased value.

I might not be being clear. I was disagreeing with sivercar's numbers above. There's 3 sources of money that make up the initial purchase price, and the partner contributed to / is responsible for 1 of these:
* Deposit 25k - OP
* Mortgage repaid 8.2k - 30% partner, 70% OP
* Mortgage outstanding - OP responsible

So the partner's share is {30% x 8.2k} of the original purchase price and OP's share is the rest.

So the partner gets back the invested 30% x 8.2k = 2.5k plus the increase in value which is {30% x 8.2k / purchase price } x 20k not just 30% x 20k.

Pixie5740

You won't have to sell your house. Just give your ex a couple of thousand so that (s)he can put down a deposit and 1st month's rent for a new home.

Guest101

saajan_12 wrote: »

I might not be being clear. I was disagreeing with sivercar's numbers above. There's 3 sources of money that make up the initial purchase price, and the partner contributed to / is responsible for 1 of these:
* Deposit 25k - OP
* Mortgage repaid 8.2k - 30% partner, 70% OP
* Mortgage outstanding - OP responsible

So the partner's share is {30% x 8.2k} of the original purchase price and OP's share is the rest.

So the partner gets back the invested 30% x 8.2k = 2.5k plus the increase in value which is {30% x 8.2k / purchase price } x 20k not just 30% x 20k.

it's Friday so my head isn't working to well, but I think what your saying makes sense

16102016

saajan_12 wrote: »

I might not be being clear. I was disagreeing with sivercar's numbers above. There's 3 sources of money that make up the initial purchase price, and the partner contributed to / is responsible for 1 of these:
* Deposit 25k - OP
* Mortgage repaid 8.2k - 30% partner, 70% OP
* Mortgage outstanding - OP responsible

So the partner's share is {30% x 8.2k} of the original purchase price and OP's share is the rest.

So the partner gets back the invested 30% x 8.2k = 2.5k plus the increase in value which is {30% x 8.2k / purchase price } x 20k not just 30% x 20k.

Wow you lost me

So deposit was me - ex gets none of that
8.2k paid off - 30% being 2.5k ex is entitled to claim back

Whats the 20k bit? Whats the total workings out? Didnt get your sum of 30% x whatever..... Thanks for your help