Declaration Of Trust Fair

HertfordshireBen

Hello All,


I have come to MSE to ask for some advice.


My Girlfriend & I are purchasing a property for £293,000. I am fortunate enough to have a bit of savings behind myself and I am prepared to put down £75,000 for the deposit leaving us with a £218,000 mortgage.


As my Girlfriend doesn't have any savings I am also paying for the legal fees including stamp duty which I estimate to be £8000.


I also would like to mention my girlfriend is a first time buyer but I am not.


The property we are looking to purchase also requires some home improvements and I estimate will be £6000 which I will also be paying for.


My girlfriend and her family are helping out with what they can in terms of furnishing the property.


I have been advised that I should get a Declaration of Trust written up to protect my assets which she has agreed with.


We have come up with that the full deposit money of £75000 + £4000 (50% legal fees) and £6000 home improvements will come back to me first if anything was to ever go wrong?


We have also said we should be Tenants in Common with a 60:40 equity split as I will be inputting 60% of the mortgage.


I would be highly appreciative if anyone could comment if this is the fairest way of proceeding with things?


Thanks in advance.


Ben

Tom99

[FONT=Verdana, sans-serif]No your DOT should not say 60/40 that will not work. You need a two part formula.
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[FONT=Verdana, sans-serif]Total cost of property £293k + SD/fees £8k + work £6k = £307k [/FONT]
[FONT=Verdana, sans-serif]Your deposit = 307 – 218 = £89k[/FONT]
[FONT=Verdana, sans-serif]Partners deposit = £0[/FONT]
[FONT=Verdana, sans-serif]Mortgage shared 60% you 40% partner = £218k[/FONT]
[FONT=Verdana, sans-serif]You are buying 89/307= 29% of property outright.[/FONT]
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[/FONT][FONT=Verdana, sans-serif]Your deed of trust should say something like this:[/FONT]
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[/FONT][FONT=Verdana, sans-serif]On the sale of the property and after paying the sale costs and redeeming the mortgage the proceeds of sale shall be split as follows:[/FONT]
[FONT=Verdana, sans-serif]Party A – 29% of the gross sale price less costs of sale[/FONT]
[FONT=Verdana, sans-serif]The remainder – Split 60%/40% between Party A and B[/FONT]

[FONT=Verdana, sans-serif]The above formula is dynamic and the exact %age of the net proceeds each party gets will vary over time as the house increases in value and the mortgage is paid off.[/FONT]
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[/FONT][FONT=Verdana, sans-serif]Eventually when the mortgage is paid off the house will be owned:[/FONT]
[FONT=Verdana, sans-serif]Party A – (89/307 + 218/307*0.6) = 71.6%[/FONT]
[FONT=Verdana, sans-serif]Party B – (0/307 + 218/307*0.4) = 28.4%[/FONT]