Tenants in common sums - Have I worked it out right?

Legacy_user

Hello,

I wondered if you could check some sums about my tenants in common workings out over for me if possible please as I am trying to do my deed of trust and the solicitor is giving me minimal help so I just want to check it out with the trusted people of this forum! Thank you in advance.

I'm buying a property with my partner who has £0 to contribute. I am contributing £87,000 (£10k in fees and £77k deposit) The property is £370k, so this makes it £380k all in. The mortgage we are taking out is for £293k

--

Each person has a 50:50 share of the full cost:
I am contributing £87k and will owe £103 = £190k
partner owes £190k

I work this out that he will own 35.15% and I will own 64.85% (is this correct please? The solicitor seems to think that I will own 100%!!)

Our mortgage repayments will be £1201 a month and my partner wishes to pay more than me to build up his equity in the property so we are using the same percentages to do the split but reversing them:

I will pay 35.15% of the mortgage payments = £422 pm
Partner will pay 64.85% of the mortgage payments = £779 pm

(I will save what I don't spend on the repayments so that I effectively get interest on my deposit and he doesn't get an interest free loan)

When we sell, I get my £87k back. The rest (I think this is right) is split with him taking 64.85% and me getting 35.15% to pay off our respective halves of the amount we each owe to the bank.

All sound good?

P.S. Just adding this extra Q - Would we do 50/50 split on repairs/maintenance or use the same percentages where he pays 64.85% and I pay 35.15%?

Many thanks all!

Slithery

Elobeans wrote: »

I am contributing £87,000 (£10k in fees and £72k in deposit)

You may want to check your sums...

System

Ah yes... whoops! Have edited with correct figure. Thank you

sew_what

:rotfl:

Elobeans wrote: »

Hello,

I wondered if you could check some sums about my tenants in common workings out over for me if possible please as I am trying to do my deed of trust and the solicitor is giving me minimal help so I just want to check it out with the trusted people of this forum! Thank you in advance.

I'm buying a property with my partner who has £0 to contribute. I am contributing £87,000 (£10k in fees and £77k deposit) The property is £370k, so this makes it £380k all in. The mortgage we are taking out is for £293k

--

Each person has a 50:50 share of the full cost:
I am contributing £87k and will owe £103 = £190k
partner owes £190k

I work this out that he will own 35.15% and I will own 64.85% (is this correct please? The solicitor seems to think that I will own 100%!!) I think you both own 50%, but he owes more than you

Our mortgage repayments will be £1201 a month and my partner wishes to pay more than me to build up his equity in the property so we are using the same percentages to do the split but reversing them:

I will pay 35.15% of the mortgage payments = £422 pm
Partner will pay 64.85% of the mortgage payments = £779 pm
Yes i get those figures too

(I will save what I don't spend on the repayments so that I effectively get interest on my deposit and he doesn't get an interest free loan)

When we sell, I get my £87k back. The rest (I think this is right) is split with him taking 64.85% and me getting 35.15% to pay off our respective halves of the amount we each owe to the bank.
What happens if the house increases in value to say 500K - you'd get £87K + 35.15%x413 = 87+145= £232K & your partner 413x 64.85 = £268K Your deposit needs to increase to reflect the overall increase in the value.

All sound good?

P.S. Just adding this extra Q - Would we do 50/50 split on repairs/maintenance or use the same percentages where he pays 64.85% and I pay 35.15%?
You each pay 50% - the fact they're borrowing more to catch up does not affect this!

Many thanks all!

My thoughts above.

Edi81

Remember that from the lenders view there is no your part and their part.
Please don’t forget this in case anything happens to the relationship.

Annisele

I agree with sew what.


An alternative way to say what they said is to take this to extremes. Assume that your deposit was for exactly 50% of the full cost. Under your method, your partner would then be paying for 100% of the whole mortgage. When you sold, you'd get your £190k back, and he'd get 100% of the rest to pay off the mortgage. That doesn't sound fair!


Also, what happens if the property falls in value - who takes that hit?

Tom99

Its fairly straight forward.

Your deed of trust will say that on the sale of the property and after paying the sale costs and redeeming the mortgage you will split the net proceeds:
You: 22.9% of the gross sale price less costs of sale plus 35.15% of the remainder
Partner: 64.85% of the remainder

Based on the above formula if you sold on day 2 you would get your deposit back but you partner would get nothing as there would be no remainder but if you sold when the mortgage has finally been paid off you will get 50/50.

getmore4less

IF you are spliting the mortgage(two virtual loans) so you contribute 50:50 total.

You own 50:50 just have a different share of the debt to pay of from your 50%.


It really is that simple.

just treat the mortgage as 2 seperate virtual debts in one account that you pay off with your own money as and when you can.

getmore4less

Many solicitors don't understand numbers except when charging by the minute.

bouicca21

Would it not be easier - and more transparently fair - for you to divide proceeds, so that you get your 87k back and everything thereafter is 50/50? And the cost of the mortgage and repairs is also split 50/50.

Tom99

bouicca21 wrote: »

Would it not be easier - and more transparently fair - for you to divide proceeds, so that you get your 87k back and everything thereafter is 50/50? And the cost of the mortgage and repairs is also split 50/50.

That would not be fair because the OP is then providing a £87k interest free loan rather than buying a 22.9% share of the property, also the partner would like to end up owning 50% and can afford to pay more of the mortgage payments but does not have a deposit.