Buying a house, is it fair? Different % ownership and mortgages

sjames7629

So I have a large deposit but my partner does not.

The house is valued at 700k, I was thinking about getting a 280k joint mortgage where we split it 50/50 and I would own 80% of the house.

Does this sound fair and can you have different % on the mortgage and ownership?

Thanks

SmashedAvacado

You can agree two things between you
1) who pays what amount of the mortgage (although the lender will want the right to go after either of you for all of it)
2) how much of the property you own each.

What you have suggested is on the face of it sensible, but not the only way of working it out
another way would be for you to share equally in the upside and downside but for your equity to be paid back to you before the profit

what you also need to be clear on, if you are to own 80% of the house, are you going to pay for 80% of the maintenance and repair? if this is to be shared, then you owning 80% of the house seems unfair.

AdrianC

Every borrower is jointly and severally liable for 100% of the mortgage - if you don't pay, the lender will come after your partner.

But you can choose to pay whatever proportion of the monthly payments you each want. The lender don't care about that, so long as somebody pays them...

You can nominate to either own the house as joint tenants - you each jointly own the whole thing, and if one person dies, their ownership simply ceases to exist, so none of the value is in their will and the survivor owns 100% straight off - or as tenants in common - with a defined %age ownership each.

Step back a bit - what are you trying to achieve...?

Tom99

You cannot just say the property is owned 80%/20%. Say you had to sell again on day 2, would you expect your partner to get back (700-280)/2=£210k?

You need a deed of trust with a two part formula. Assuming £700k includes all fees etc and you are putting in £420k cash with the £280k mortgage, it should say something like this:

[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 – 60% of the gross sale price less costs of sale[/FONT]
[FONT=Verdana, sans-serif]The remainder – Split 50%/50% 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]
[FONT=Verdana, sans-serif]
[/FONT][FONT=Verdana, sans-serif]Eventually when the mortgage is paid off the house will be owned:[/FONT]
[FONT=Verdana, sans-serif]Party A – (420/700 + 280/700*0.5) = 80%[/FONT]
[FONT=Verdana, sans-serif]Part[/FONT][FONT=Verdana, sans-serif]y B[/FONT][FONT=Verdana, sans-serif] – (0/700 + 280/700*0.5) = 20%[/FONT]