Splitting Mortgage Payments with Partner - Porting mortgage

getmore4less

ok if we start from

1. you have no part in the previous property
2 you want to buy the new property 50:50.

For 2. you need to fund 50% each with cash or debt.

as you say the deposits are already sorted(assume purchase fees the same 50:50)

Between you you need to borrow 50% each of the rest( £107,196+£272,804= £380k £190k each).

you pay £190k worth of the top up and the OH pays the rest and all of the bit he is bringing with him.

easiest way to do this is to treat it as 3 virtual loans that way you can deal with any overpayments in a simple way.

The issue is there are 2 elements to any repayment mortgage(interest & capital) and what you need to do is make sure you are servicing your share of the debt only(£190k @ 1.99%)

Trying to adjust the other bit pretending some is @ 1.99% will not be so easy/obvious, interest only it would be easy.

the split becomes

YOU
£190k 24y @ 1.99% on 5y fix
payment £830.29pm in 5 years you owe £157,525

OH
£82,804k 24y @ 1.99% on 5y fix
payment £361.85pm in 5 years he owe £68,651

£107,196 24y @ 3.34% on a 8y(ish) fix.
payment £541.60pm in 5 years he owes £91,336
total payment £903.45 in 5 years £159987

........................................................
if you split 50:50 both bits
£272804 24y @ 1.99% on 5y fix
payment £1192.14pm in 5 years owe £226,176

£107,196 24y @ 3.34% on a 8y(ish) fix.
payment £541.60pm in 5 years owe £91,336

totals each £866.87 in 5 years £158756

that makes the difference in your payment less than £37pm and after 5 years the amount you owe less than £1250.

Are you going to be splitting all your finances within this sort of amount less than a meal out a month.

....................................
If you do want to go this accurate.
overpayments obviously it is better to overpay the higher rate.
If you want to overpay say £1k on you bit.
You transfer £1k cash and £1k of your 1.99% rate to the OH and he pays the cash off the 3.34% rate

With the mortgage calculators or spreadsheet it will be very easy to keep track of the 3 parts even with regular overpayments

...................................

Still need the LTV and the ERC to see if porting is the best option

lou1182

Thank you Tom99, £120 is quite a big gap.

Would you mind sharing with us the method of calculation for future reference?

Thank you!
Linda

SeduLOUs

lou1182 wrote: »

Thank you Tom99, £120 is quite a big gap.

Would you mind sharing with us the method of calculation for future reference?

Thank you!
Linda

It's 1.35% of £107,196.

getmore4less

lou1182 wrote: »

Thank you Tom99, £120 is quite a big gap.

Would you mind sharing with us the method of calculation for future reference?

Thank you!
Linda

Problem is the method needs further work to get the position in 5 years.

What happens to the £120pm?

lou1182

getmore4less - Thank you so much for your detailed answer! I like your method of splitting the mortgage into 3 pieces.. I can see us following the same method in the future when the rates go higher...
Right now the difference in payments (£37pm) is not worth considering. We'll see what the future brings.

Thanks again!
Linda

getmore4less

don't forget the trust deed to document how the shares work

It is easier to separate the debt from the equity as you can pay down your own debts at your own rates,
input into the property for maintenance and improvements should remain at the equity shares(50:50)

Then there are the conditions for any separations, buyouts sale etc.

then the can't pay, won't pay(this one is easier with the debts described separately as you can move the debt around without changing the equity shares

lou1182

getmore4less - Our solicitor has already drafted a deed that explains the shares..but thanks for the reminder

Thank you again and have a great day!
Linda

getmore4less

lou1182 wrote: »

getmore4less - Our solicitor has already drafted a deed that explains the shares..but thanks for the reminder

Thank you again and have a great day!
Linda

Careful, a lot of solicitors get this wrong ,,

people come hear quite regular with problem trust deeds poorly written.

The key for yours will be explaining how the debt works.

lou1182

Ok.. We'll make sure that the deed describes the debt as well, so it's all nice and clear.

Thanks
Linda