Two Different Sized Deposit Contributions

MoneyMan01

Can anyone advise on the above?

Thrugelmir

Declaration of trust covers you both legally in the event of a dispute. How this is drafted depends on what you agree between you. You need to sit down and discuss the matter at length and in detail. 

getmore4less

TheDarkKnight93 said:

getmore4less said:

There are 2 main options 

1. Get your money back
   this is the same as lending the other person 1/2 the difference, own 50:50
2. equitable shares
   you work out how much you own based on the deposit an share of the mortgage.
   eg with a 10% deposit shared 80:20 mortgage 50:50 you own 53% 47%  (less 1/2 outstanding mortgage)

You can modify the second option to have the one with the smaller deposit pay more of the mortgage to balance it up.


The second option is the fairer one as it reflects the value of what you have bought in proportion so work for both rises and falls.


Many forget it is total cost of buying that needs to be counted not just the cost of the property.


either way it is not 80:20 as is being suggested.

So with option 2, I think this seems the most logical and fair way when entering something like this.

How did you break down the maths of the 53% / 47% split based on 80:20 Deposit / 50:50 Mortgage payments?

Also, when you say total cost of buying, I thought the deposit would only be towards the actual property price?

What else would contribute to "total costs"? Solicitors etc?

The plan would be to pay for solicitors etc. 50:50, just the deposit itself wouldn't be 50:50 as we both have vastly different amounts saved up.

I don't really understand how the % equitable share split would be worked out in full depth with the actual calculation that needs to be applied?

Starting with the costs

you should include everything spent buying the place
 
If you are paying out £100k to buy  and the costs are £5k 

The starting point is £105k not £100k
depends how far you want to go, obvious are solicitors, surveys, SDLT, mortgage fees... anything  paid up front.
Then you have incidentals like fuel doing viewings etc that are probably not worth bothering about.

equitable splits
taking £100k base with 10%(80:20)  90%(50:50)  that's (8+45)/100  and (2+45)/100   53:47
people get confused  when thereis a mortgage.

53:47 cash  people get that.

53:47 part cash part borrowed from some other independent, like bank of mum and dad 
Most still get  it.

change the lender makes  no difference  you owe the same money 50:50 to the lender..
another way to look at it is 
8% buys 8%
2% buys 2%
90% buys 45% each but you pay out out any outstand from that 45% not the bit you paid cash for.

if we combine the  costs and purchase  there are also £2.5k each costs it changes for 8+2+90 to 
8k+2.5k/105  = 10%
2k+2.5k/105 = 4.3%  
90k/105  =  85.7%
so now we have (10:5+45)/105 and (4.5+45)/105  52.86:47.14

By splitting the cost 50:50 the one with the bigger deposit gains

When you sell the place lets say now nets after the costs(before the mortgage)  £150k  and mortgage is 80k
(150*0.5286) - 40  = 39.29
(150*0.4714) - 40  = 30.71

most of the gain is on the bit the mortgage bought which was paid 50:50.
 

getmore4less

Doozergirl said:

There are so many threads on this board about the difficulties involved in getting a sibling/friend/ex-partner to move out of a house and sell up when only one party wants to.    I would seriously consider your options if this is not a life-plan for you to live together long term.  How long before one of you finds a life-partner and wants to move, potentially leaving one single sibling being forced to move but unable to afford such a nice place by themselves?  Presumably if you could both afford to live separately, you probably would?

I've read enough posts that our wills now stipulate that any property we own is to eventually be sold and the funds distributed between our two children.  They will not inherit a house for them to fight over because one was already living in it or moved into it, effectively landing the other child as an unwilling landlord.  It leaves them with the choice of being trapped or having to take their own sibling to court at great cost.      

If this is a very long term plan, then it might be a little different, but things can change quickly and there's always one person significantly put out financially.  

Great on paper but in practice kids  can ignore that and still argue over who gets it.
Not helped if you make the kids executors, and solictor executors are not always the solution.