Decoration of trust

kristina_1991

Wondering if anyone can help as I’m getting confused about writing up the declaration of trust for a mortgage split between me and my partner. I am putting down the whole deposit of £76.000, the house is £352.000. We are splitting the mortgage monthly repayments 50/50. What is the fairest option considering we are paying equal amounts back? Do I just request if we were to split that I get my £76.000 back and then split the rest 50/50 or to get some sort of return on my investment would we put it down in percentages instead ? I.e. I ask for 20% back of the sale price before then splitting the remaining 80% evenly? Would that then be unfair on my partner who is paying 50% of the mortgage repayments ? Would be grateful for any advice as the conveyancer isn’t able to give advice. 

AdrianC

Sit down around the kitchen table with a bottle of wine, and decide between the two of you what YOU agree is "fairest".

tink_1983

kristina_1991 said:

Wondering if anyone can help as I’m getting confused about writing up the declaration of trust for a mortgage split between me and my partner. I am putting down the whole deposit of £76.000, the house is £352.000. We are splitting the mortgage monthly repayments 50/50. What is the fairest option considering we are paying equal amounts back? Do I just request if we were to split that I get my £76.000 back and then split the rest 50/50 or to get some sort of return on my investment would we put it down in percentages instead ? I.e. I ask for 20% back of the sale price before then splitting the remaining 80% evenly? Would that then be unfair on my partner who is paying 50% of the mortgage repayments ? Would be grateful for any advice as the conveyancer isn’t able to give advice. 

My decloration of trust says I get my initial investment back and then anything else is split 50/50. 
To me yes I paid the deposit but without partners income we would not have been able to afford the house we wanted. So aslong as I get my initial deposit back splitting any profit seemed fair to me.
You need to decide what your comfortable with I suppose.

alex_163163

Agree with the above - you both need to agree what is fairest for the two of you.
Just for info, OH and I did your first suggestion - (assuming we are in equity upon sale) I get back my deposit amount and then split any other equity 50/50 as we were splitting all bills and mortgage evenly. Some might argue that it’s not fair that you don’t see a return on your investment that way, but in our case I had the deposit but couldn’t get a mortgage on my own due to lower salary, and vice versa for my OH. So we both needed each other to buy the property so I was happy just to state that I’d just get my initial deposit amount back.

you should also consider what happens if the property has decreased in value, or is in negative equity if you have to sell. 

xylophone

Decoration of trust

With bells on?

kristina_1991

xylophone said:

Decoration of trust

With bells on?

Oops. It’s the Christmas edition 😂

SDLT_Geek

@Tom99 used to explain a structure where OP got some appreciation on the £76K extra if property prices improved.  In this case he might have suggested a "dynamic" formula where the shares change over time as the amount of mortgage outstanding changes.  Let us start with some figures. Let us call the total costs of purchase £352K and OP's cash payment £76K.  OP and the partner "put in" the other £276K of borrowed money equally, so that is £138K each to give contributions (including borrowed money) of £214K and £138K.  

We can work out headline percentages:
OP 214/352 = about 61%
OP's Partner 138/352 = about 39%

The formula @Tom99 might have used would be:

"On a sale, the net sale proceeds after deduction of sale costs and mortgage debt will be split:
OP - (61% of Gross sale proceeds less costs of sale) but then less 50% of mortgage outstanding
OP's partner - (39% of Gross sale proceeds less costs of sale) but then less 50% of mortgage outstanding".

This formula gives different results at different times depending on things like the sale proceeds and debt.  For example:
(a)  If the property is sold soon after, without making a profit  or loss and without the mortgage having been reduced, OP will get all of the net equity.
(b)  If the property is sold many years later when the mortgage has been paid off, then OP would get 61% and the partner 39%.

Angela_D_3

If i jointly bought a house going forward  the only thing i would agree to is the initial deposit  returned and then 50/50 split .... 
you dont get to double dip in the pot.  

GDB2222

Angela_D_3 said:

If i jointly bought a house going forward  the only thing i would agree to is the initial deposit  returned and then 50/50 split .... 
you dont get to double dip in the pot.  

If property prices drop, so your partner can’t get the whole deposit back, would you agree to reimburse half the loss?

Angela_D_3

GDB2222 said:

Angela_D_3 said:

If i jointly bought a house going forward  the only thing i would agree to is the initial deposit  returned and then 50/50 split .... 
you dont get to double dip in the pot.  

If property prices drop, so your partner can’t get the whole deposit back, would you agree to reimburse half the loss?

Again that would be double dipping wouldn’t it ... no risk with all the benefits.   

They get the capital gains or the losses.  The deposit is what allowed them to roll the dice in the first place.  

GDB2222

Angela_D_3 said:

GDB2222 said:

Angela_D_3 said:

If i jointly bought a house going forward  the only thing i would agree to is the initial deposit  returned and then 50/50 split .... 
you dont get to double dip in the pot.  

If property prices drop, so your partner can’t get the whole deposit back, would you agree to reimburse half the loss?

Again that would be double dipping wouldn’t it ... no risk with all the benefits.   

They get the capital gains or the losses.  The deposit is what allowed them to roll the dice in the first place.  

I don’t think it’s double dipping. One partner puts in the deposit. If prices drop they lose it, whilst if prices rise they get the same benefit as the partner who risked nothing.