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

bouicca21

Index link the 87k?

saajan_12

Elobeans wrote: »

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

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Each person has a 50:50 share of the full cost:
I am contributing £87k and will owe £103 = £190k
partner owes £190k
- okay, so the property itself is owned 50/50.

I work this out that he will own 35.15% and I will own 64.85% - how have you calcluated this? (is this correct please? The solicitor seems to think that I will own 100%!!) - that is 100% of the equity right now - this will change as the value changes and as the mortgage gets paid down. So not really helpful for a deed which you won't want to update regularly.

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 agree with this, so that your portions of the mortgage payments match your portions of the total amount borrowed So
YOU: 103k / 293k = 35.15% of mortgage, so payments = 35.15% x £1201 = £422
PARTNER: 190K / 293K = 64.85% of mortgage, so payments = 64.85% x £1201 = £779

(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)
- well you're saving the interest on 87k worth of mortgage.
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. - no, then your 87k is fixed, and you get no house price rise (or fall) on that portion whereas the mortgaged portions do.


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%?
- if you want to own 50/50 then all the capital expenses need to be 50/50. How you financed the initial purchase is irrelevant.
Many thanks all!

I would separate the house ownership and how you finance it.
House: owned 50/50. That's 50% of purchase price, buying fees, repairs, sale fees, etc etc.

Finance that purchase through either deposit or mortgage.
YOU: Deposit £87k + Mortgage 35.15% of mortgage
PARTNER: Deposit £0 + Mortgage 64.85% of mortgage

When you sell, you each pay your portion of the mortgage out of your share of the property value. So if the property has gone up to £400k value and mortgage balance is £220k, then
YOU: 50% of house, 200k less 35.15% of mortgage, 77k = £123k
PARTNER: 50% of house, 200k less 64.85% of mortgage, 143k = £57k.

getmore4less

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 be the equivalent of the op lending their OH £43,500 interest free.

Maybe they don't want to do that.

getmore4less

bouicca21 wrote: »

Index link the 87k?

Then it become taxable gain if the op OH is paying them

far easier to adjust the borrowing