Tennants in Common mathematical question!

zipp

getmore4less said:

Once you step away from the debt being paid at the agreed % you have to do some re calculations.

One option that works is you recalculate just the debt and then change the % on the debt paid.

eg. if there was £40k left and you paid of your £20k  it would change from 50:50  to 100:0 and OH would just keep paying their share.  

where you pay it off completely say it was £20k,  £10k each then OH owes you £10k   
you can do the same as with other cash inputs a virtual sale and buy.

using this starting point.
shares before costs added of the cash in and debt serviced
S1 = £60k + £72.5k = £132.5k/£345k  = 38.406%
S2 = £140k + £72.5k  = £212.5k/£345k = 61.594%
Say the place is now worth £480k  with £20k mortgage
S1 = £480 * 38.406% = £184,349  
if really selling you would take off the £10k from that but you are adding £20k you use £10k to pay off your share of the mortgage and transfer £10k from the OH to cover his share that you paid off
share becomes
S1 = £194,349/£480k = 40.489%  (2.083% more)

Another way to look at it(which may be easier) is £20k/£480k is 4.167%  and you are buying 1/2 of that off the OH 2.083(5)%

This can also be used for unequal overpayments where you want to keep the mortgage at 50:50,  any OP buys 1/2 its value off the OH at current value


~0.001% is £5 on £500k house  so rounding to 3dp does introduce errors that can accumulate but  end of the day when dealing with £100k and guesses for things like value the odd £100 is loose change. 

have gone over the calcs and had to change them as I got finger trouble  so do check the numbers carefully once you grasp the principle always worth doing both S1 and S2 to make sure the % add up to 100% and the cash adds up to the value as

Having done all that what a lot of people do is go the get your deposits back route and keep everything 50:50  it is an option to do that retrospectively.

It is the same as the OH lending you the money interest free to balance the deposits but forego the interest/equity change

In this case equivalent of £40k loan to you that you can pay back as you go or just pay back if you ever sold/split

Might be much simpler way to approach it if the reality is you share you lives on a pretty much shared basis.
it does change the potential cash position a lot though when property prices go up as that £40k would be 11.6% of the property value that OH loses the increase on.

Great thank you, I think we should look at all our payments and overpayments when the mortgage has been paid off and if it is all 50/50 that makes it pretty simple as per your second reply. Ver helpful thank you so much for your kind help.