Tenants in Common - unequal deposit and mortgage repayments

gettingtheresometime

getmore4less wrote: »

You could do but that is not equitable or fair.

Not even if the mortgage payments were 50:50?

Easiest way is to do equal deposits equal mortgage payments so if that means higher mortgage payments or cheaper property then so be it

itchyfeet123

getmore4less wrote: »

Fiscally there is no argument, if you service the debt you own what you bought with that debt. anything less and you are getting done.

any algorithm needs to work for all numbers.

consider

A puts a £1 down B pay the interest only mortgage, by your algorithm...
A owns 100% B never owns anything clearly not right.

No, under my proposal, A would own 1/(1+total mortgage paid by and B would own total mortgage paid/(total mortgage+1).

I did suggest the possibility of adjusting how much of the mortgage payments counted. This is because the total amount paid towards the mortgage is, to a certain extent, manipulable by B. For example, if the intention is to keep this home until long into old age, then by taking out a longer term mortgage, B will end up paying more than with a shorter term mortgage.

getmore4less

itchyfeet123 wrote: »

No, under my proposal, A would own 1/(1+total mortgage paid by and B would own total mortgage paid/(total mortgage+1).

I did suggest the possibility of adjusting how much of the mortgage payments counted. This is because the total amount paid towards the mortgage is, to a certain extent, manipulable by B. For example, if the intention is to keep this home until long into old age, then by taking out a longer term mortgage, B will end up paying more than with a shorter term mortgage.

if using actual mortgage payments that is even more bonkers.

if just using the capital payments it does not work for interest only mortgage

Test your model with some real numbers and boundary cases.

getmore4less

gettingtheresometime wrote: »

Not even if the mortgage payments were 50:50?

that changes the original proposal with a £90k mortgage from

Person 1) £184,200 deposit (60% of property value) + no mortgage repayments
Person 2) £32,800 deposit (10.68% of property value) + 100% of mortgage repayments

to them paying mortgage 50:50 then they own

74.66% (£184,200+£45k)
25.34% (£32,800+£45k)

say house doubles mortgage paid off they get

£458,412
£155,588

not sure how you got you £151,800 but using that +50% you get
£382,900
£231,100

which is wrong.

gettingtheresometime

getmore4less wrote: »

that changes the original proposal with a £90k mortgage from


to them paying mortgage 50:50 then they own

74.66% (£184,200+£45k)
25.34% (£32,800+£45k)

say house doubles mortgage paid off they get

£458,412
£155,588

not sure how you got you £151,800 but using that +50% you get
£382,900
£231,100

which is wrong.

The £151,800 is the difference in deposits (well actually it's £151,400 but I was keeping the same figures not to confuse anyone.


It seems bonkers to me to do what the OP is suggesting - it just seems to make things more complicated than they need to be.


To me you can do one of three things:


1. Ignore the difference in deposits - which obviously isn't fair to Partner 1 if it all goes pear shaped


2. Give partner 1 £151,400 difference in deposit adjusted upwards or downwards depending on how the house value alters


3. A smaller deposit with equal sums and equal mortgage payments being made by each of the Partners.


Everything else seems too convoluted and a money maker for solicitors if the relationship goes wrong

BJV

Perhaps it is me being a little simplistic but why not say split the mortgage.

If the house is sold or the relationship breaks down why not just say that on disposal of the property that person 1 get the original deposit back and person 2 gets their deposit back the rest is split 50-50.

saajan_12

I think just about everyone's suggestion is more complicated than OP's idea. Its all well and good proposing changes to their deposit / mortgage contributions but its all moot if the OP and partner can't afford that / can't live in a property worth the suggested cash.

As OP suggested, each person own's the proportion of house corresponding to the amount of cash they put in + mortgage they service (interest + capital). If one has a higher deposit, it's fair that they pay less/zero interest as they have the money upfront, which could otherwise be earning interest.

The only issue I see is how much would the mortgage payments be out of person 2's income and could they still equally contribute to bills / general living expenses? If Person 1 has no rent/mortgage, where does their surplus income go? Think about a potential strain on the relationship as well as the financials.

getmore4less

BJV wrote: »

Perhaps it is me being a little simplistic but why not say split the mortgage.

If the house is sold or the relationship breaks down why not just say that on disposal of the property that person 1 get the original deposit back and person 2 gets their deposit back the rest is split 50-50.

That is the equivalent to the person with the higher deposit giving the other an interest free loan for 1/2 the difference.

That's fine as long as they are happy with giving that interest free loan.

freeman3030

I personally think percentages are really unfair unless maintenance/home improvements are split at the same ratio. Trying to agree on home improvements will be a nightmare because one of you will always be spending more and that person will probably end up having more say over what you choose to do.
My partner pays all of our mortgage/insurances/council tax and I pay for the food/electric/gas/car and buy appliances as and when needed. But i also do 90% of the cooking, washing and all of the gardening and redecoration when required. I think too little attention is sometimes drawn to the upkeep of the home and that's where in our relationship it balances out.
Can you both not out in your individual deposit ammounts and split the mortgage/upkeed fairly.
If you split, both take back your deposits and split the profit (if any).

Murray87

Have to say this is really depressing to read. It may be sensible from a financial point of view but I certainly wouldn't want that monthly reminder of how much one person or the other had contributed each time a mortgage payment was made. To me it would just feel like one person was constantly working to build their percentage up, staircasing to build up their 'share' from the other. Could you not just maintain your respective deposit shares if you were to ever split up, so 60% and 10.68% (and 50% each of any equity) but pay into the mortgage equally? I think there is also an assumption that you are both earning the exact same amount, but again if one is earning considerably more than the other this seems unfair. Just my opinion.