Partner contributing more when putting a deposit down on a house ?

getmore4less

Tokmon said:

getmore4less said:

Tokmon said:

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

classic error in how it should be done.

The proceeds after costs but before mortgage gets paid 40%,  5%, rest(less after mortgage) 50:50.

if they pay the mortgage 50:50

How is that an error?

If you sell the house for the same price then each person get's back their original deposit and it goes up and does as the value increases. If you take off the fixed costs first then that means both deposits are reduced by an equal percentage based on the amount but then the person with the lower deposit amount will benefit more when the rest is split 50/50 and the person with the larger person would lose out in the 50/50 split.

So that isn't fair to me. 

It fair because the cost are spread between all the portions that bought the place in proportion to the share they own


If you just allocate to the mortgage it skews the payout so the smaller deposit end up paying a bigger proportion of the cost.

Any algorithm has to work for all values.

Eg buy £100k
One deposit £50k, mortgage £50k split. 50:50
Sell for £100k £10k costs, £90k net before mortgage

Deposit person should get back £45k not £50k which you propose.

Tokmon

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

classic error in how it should be done.

The proceeds after costs but before mortgage gets paid 40%,  5%, rest(less after mortgage) 50:50.

if they pay the mortgage 50:50

How is that an error?

If you sell the house for the same price then each person get's back their original deposit and it goes up and does as the value increases. If you take off the fixed costs first then that means both deposits are reduced by an equal percentage based on the amount but then the person with the lower deposit amount will benefit more when the rest is split 50/50 and the person with the larger person would lose out in the 50/50 split.

So that isn't fair to me. 

It fair because the cost are spread between all the portions that bought the place in proportion to the share they own


If you just allocate to the mortgage it skews the payout so the smaller deposit end up paying a bigger proportion of the cost.

Any algorithm has to work for all values.

Eg buy £100k
One deposit £50k, mortgage £50k split. 50:50
Sell for £100k £10k costs, £90k net before mortgage

Deposit person should get back £45k not £50k which you propose.

Well that doesn't mean I made an "error" that's just a difference in opinion.

In my example when two people buy the house together and own it 50% each then they should pay 50% of the purchase costs each and then 50% of the sale costs each. The are also paying 50% of the mortgage costs each because they share the home equally. 

The only difference is the original deposit amount which to protect each party they get back the share they each get in a percentage of the house. Now reading what you said i think you agree with that you just seem confused on the math.


In your example they buy for £100k and one person puts in £50 so 50% of the deposit. 
Let's say they sell right away so don't pay even 1 mortgage payment to make it easier.

So they sell for £100k and 50% in trust goes to person 1 and 0% goes to person 2 (which is what their deposits were). They then split sale costs equally so that's -£5 each so person 1 gets £45k and person 2 owes £5k.


But let's do it your way:

So they sell for £100 and take off £10 costs with £90 left. Person 1 gets £45k deposit back and person 2 gets 0% back as they put in no deposit. 
So then there is £45k left but a £50k mortgage owed. So then each person would pay half each of the £5 shortfall. So the person who put in the deposit would pay £7.5k in total and the person who put in nothing would pay £2.5.

So why should the person putting in the bigger deposit pay more in fees when they sell? I think it should be 50/50 as they owned the house 50/50



The way i have said originally works for all deposit percentage and any increase or decrease in prices. 

Like I said if you take off the deposit amount first then it can lead to a situation where the person with the lower deposit benefit more. I can show this as an example if you want as I have it in a spreadsheet so can do any combination you want.

But I think you will understand now as you just forgot about negative numbers when doing my calculation. You also forgot about the mortgage shortfall doing it your way.

getmore4less

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

classic error in how it should be done.

The proceeds after costs but before mortgage gets paid 40%,  5%, rest(less after mortgage) 50:50.

if they pay the mortgage 50:50

How is that an error?

If you sell the house for the same price then each person get's back their original deposit and it goes up and does as the value increases. If you take off the fixed costs first then that means both deposits are reduced by an equal percentage based on the amount but then the person with the lower deposit amount will benefit more when the rest is split 50/50 and the person with the larger person would lose out in the 50/50 split.

So that isn't fair to me. 

It fair because the cost are spread between all the portions that bought the place in proportion to the share they own


If you just allocate to the mortgage it skews the payout so the smaller deposit end up paying a bigger proportion of the cost.

Any algorithm has to work for all values.

Eg buy £100k
One deposit £50k, mortgage £50k split. 50:50
Sell for £100k £10k costs, £90k net before mortgage

Deposit person should get back £45k not £50k which you propose.

Well that doesn't mean I made an "error" that's just a difference in opinion.

In my example when two people buy the house together and own it 50% each then they should pay 50% of the purchase costs each and then 50% of the sale costs each. The are also paying 50% of the mortgage costs each because they share the home equally. 

The only difference is the original deposit amount which to protect each party they get back the share they each get in a percentage of the house. Now reading what you said i think you agree with that you just seem confused on the math.


In your example they buy for £100k and one person puts in £50 so 50% of the deposit. 
Let's say they sell right away so don't pay even 1 mortgage payment to make it easier.

So they sell for £100k and 50% in trust goes to person 1 and 0% goes to person 2 (which is what their deposits were). They then split sale costs equally so that's -£5 each so person 1 gets £45k and person 2 owes £5k.


But let's do it your way:

So they sell for £100 and take off £10 costs with £90 left. Person 1 gets £45k deposit back and person 2 gets 0% back as they put in no deposit. 
So then there is £45k left but a £50k mortgage owed. So then each person would pay half each of the £5 shortfall. So the person who put in the deposit would pay £7.5k in total and the person who put in nothing would pay £2.5.

So why should the person putting in the bigger deposit pay more in fees when they sell? I think it should be 50/50 as they owned the house 50/50



The way i have said originally works for all deposit percentage and any increase or decrease in prices. 

Like I said if you take off the deposit amount first then it can lead to a situation where the person with the lower deposit benefit more. I can show this as an example if you want as I have it in a spreadsheet so can do any combination you want.

But I think you will understand now as you just forgot about negative numbers when doing my calculation. You also forgot about the mortgage shortfall doing it your way.

They won't own the house 50:50 when the person that puts in 50% and the deed says they gets 50% back first, they own that 50% + the share of the mortgage paid.
 
50% + 1/2 the mortgage means they bought 75%,  the person with no deposit only buys 25%

The 50% they own from their cash is only worth £45k now not £50k 

50% of the loss belongs to the 50% bought with cash the other 50% to the 50% that used borrowing 

Tokmon

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

classic error in how it should be done.

The proceeds after costs but before mortgage gets paid 40%,  5%, rest(less after mortgage) 50:50.

if they pay the mortgage 50:50

How is that an error?

If you sell the house for the same price then each person get's back their original deposit and it goes up and does as the value increases. If you take off the fixed costs first then that means both deposits are reduced by an equal percentage based on the amount but then the person with the lower deposit amount will benefit more when the rest is split 50/50 and the person with the larger person would lose out in the 50/50 split.

So that isn't fair to me. 

It fair because the cost are spread between all the portions that bought the place in proportion to the share they own


If you just allocate to the mortgage it skews the payout so the smaller deposit end up paying a bigger proportion of the cost.

Any algorithm has to work for all values.

Eg buy £100k
One deposit £50k, mortgage £50k split. 50:50
Sell for £100k £10k costs, £90k net before mortgage

Deposit person should get back £45k not £50k which you propose.

Well that doesn't mean I made an "error" that's just a difference in opinion.

In my example when two people buy the house together and own it 50% each then they should pay 50% of the purchase costs each and then 50% of the sale costs each. The are also paying 50% of the mortgage costs each because they share the home equally. 

The only difference is the original deposit amount which to protect each party they get back the share they each get in a percentage of the house. Now reading what you said i think you agree with that you just seem confused on the math.


In your example they buy for £100k and one person puts in £50 so 50% of the deposit. 
Let's say they sell right away so don't pay even 1 mortgage payment to make it easier.

So they sell for £100k and 50% in trust goes to person 1 and 0% goes to person 2 (which is what their deposits were). They then split sale costs equally so that's -£5 each so person 1 gets £45k and person 2 owes £5k.


But let's do it your way:

So they sell for £100 and take off £10 costs with £90 left. Person 1 gets £45k deposit back and person 2 gets 0% back as they put in no deposit. 
So then there is £45k left but a £50k mortgage owed. So then each person would pay half each of the £5 shortfall. So the person who put in the deposit would pay £7.5k in total and the person who put in nothing would pay £2.5.

So why should the person putting in the bigger deposit pay more in fees when they sell? I think it should be 50/50 as they owned the house 50/50



The way i have said originally works for all deposit percentage and any increase or decrease in prices. 

Like I said if you take off the deposit amount first then it can lead to a situation where the person with the lower deposit benefit more. I can show this as an example if you want as I have it in a spreadsheet so can do any combination you want.

But I think you will understand now as you just forgot about negative numbers when doing my calculation. You also forgot about the mortgage shortfall doing it your way.

They won't own the house 50:50 when the person that puts in 50% and the deed says they gets 50% back first, they own that 50% + the share of the mortgage paid.
 
50% + 1/2 the mortgage means they bought 75%,  the person with no deposit only buys 25%

The 50% they own from their cash is only worth £45k now not £50k 

50% of the loss belongs to the 50% bought with cash the other 50% to the 50% that used borrowing 

When you buy a house tentants in common then it's perfectly possible for two people to legally own a house 50% each and then have a declaration of trust stating how the money is split when the house is sold. 

So again like I said in my example they buy the house 50/50 because they want to split all costs and own it together but there is a difference in deposit initially so the declaration of trust accounts for that when it's sold.


Your now quoting a different situation where one person owns 75% and one person owns 25% and that will obviously have different splits.


So there was no mistake in my initial comment like you stated and you were just confused about the ownership of the house so hopefully this post has cleared it up.

getmore4less

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

classic error in how it should be done.

The proceeds after costs but before mortgage gets paid 40%,  5%, rest(less after mortgage) 50:50.

if they pay the mortgage 50:50

How is that an error?

If you sell the house for the same price then each person get's back their original deposit and it goes up and does as the value increases. If you take off the fixed costs first then that means both deposits are reduced by an equal percentage based on the amount but then the person with the lower deposit amount will benefit more when the rest is split 50/50 and the person with the larger person would lose out in the 50/50 split.

So that isn't fair to me. 

It fair because the cost are spread between all the portions that bought the place in proportion to the share they own


If you just allocate to the mortgage it skews the payout so the smaller deposit end up paying a bigger proportion of the cost.

Any algorithm has to work for all values.

Eg buy £100k
One deposit £50k, mortgage £50k split. 50:50
Sell for £100k £10k costs, £90k net before mortgage

Deposit person should get back £45k not £50k which you propose.

Well that doesn't mean I made an "error" that's just a difference in opinion.

In my example when two people buy the house together and own it 50% each then they should pay 50% of the purchase costs each and then 50% of the sale costs each. The are also paying 50% of the mortgage costs each because they share the home equally. 

The only difference is the original deposit amount which to protect each party they get back the share they each get in a percentage of the house. Now reading what you said i think you agree with that you just seem confused on the math.


In your example they buy for £100k and one person puts in £50 so 50% of the deposit. 
Let's say they sell right away so don't pay even 1 mortgage payment to make it easier.

So they sell for £100k and 50% in trust goes to person 1 and 0% goes to person 2 (which is what their deposits were). They then split sale costs equally so that's -£5 each so person 1 gets £45k and person 2 owes £5k.


But let's do it your way:

So they sell for £100 and take off £10 costs with £90 left. Person 1 gets £45k deposit back and person 2 gets 0% back as they put in no deposit. 
So then there is £45k left but a £50k mortgage owed. So then each person would pay half each of the £5 shortfall. So the person who put in the deposit would pay £7.5k in total and the person who put in nothing would pay £2.5.

So why should the person putting in the bigger deposit pay more in fees when they sell? I think it should be 50/50 as they owned the house 50/50



The way i have said originally works for all deposit percentage and any increase or decrease in prices. 

Like I said if you take off the deposit amount first then it can lead to a situation where the person with the lower deposit benefit more. I can show this as an example if you want as I have it in a spreadsheet so can do any combination you want.

But I think you will understand now as you just forgot about negative numbers when doing my calculation. You also forgot about the mortgage shortfall doing it your way.

They won't own the house 50:50 when the person that puts in 50% and the deed says they gets 50% back first, they own that 50% + the share of the mortgage paid.
 
50% + 1/2 the mortgage means they bought 75%,  the person with no deposit only buys 25%

The 50% they own from their cash is only worth £45k now not £50k 

50% of the loss belongs to the 50% bought with cash the other 50% to the 50% that used borrowing 

When you buy a house tentants in common then it's perfectly possible for two people to legally own a house 50% each and then have a declaration of trust stating how the money is split when the house is sold. 

So again like I said in my example they buy the house 50/50 because they want to split all costs and own it together but there is a difference in deposit initially so the declaration of trust accounts for that when it's sold.


Your now quoting a different situation where one person owns 75% and one person owns 25% and that will obviously have different splits.


So there was no mistake in my initial comment like you stated and you were just confused about the ownership of the house so hopefully this post has cleared it up.

You explanation of the deed of trust is not owning 50:50 if the person that puts down 50% get 50% back first.

Don't compound your initial error.

Edit:
If they get 50% then 1/2 the rest after the mortgage the deed gives them 75%

Tokmon

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

classic error in how it should be done.

The proceeds after costs but before mortgage gets paid 40%,  5%, rest(less after mortgage) 50:50.

if they pay the mortgage 50:50

How is that an error?

If you sell the house for the same price then each person get's back their original deposit and it goes up and does as the value increases. If you take off the fixed costs first then that means both deposits are reduced by an equal percentage based on the amount but then the person with the lower deposit amount will benefit more when the rest is split 50/50 and the person with the larger person would lose out in the 50/50 split.

So that isn't fair to me. 

It fair because the cost are spread between all the portions that bought the place in proportion to the share they own


If you just allocate to the mortgage it skews the payout so the smaller deposit end up paying a bigger proportion of the cost.

Any algorithm has to work for all values.

Eg buy £100k
One deposit £50k, mortgage £50k split. 50:50
Sell for £100k £10k costs, £90k net before mortgage

Deposit person should get back £45k not £50k which you propose.

Well that doesn't mean I made an "error" that's just a difference in opinion.

In my example when two people buy the house together and own it 50% each then they should pay 50% of the purchase costs each and then 50% of the sale costs each. The are also paying 50% of the mortgage costs each because they share the home equally. 

The only difference is the original deposit amount which to protect each party they get back the share they each get in a percentage of the house. Now reading what you said i think you agree with that you just seem confused on the math.


In your example they buy for £100k and one person puts in £50 so 50% of the deposit. 
Let's say they sell right away so don't pay even 1 mortgage payment to make it easier.

So they sell for £100k and 50% in trust goes to person 1 and 0% goes to person 2 (which is what their deposits were). They then split sale costs equally so that's -£5 each so person 1 gets £45k and person 2 owes £5k.


But let's do it your way:

So they sell for £100 and take off £10 costs with £90 left. Person 1 gets £45k deposit back and person 2 gets 0% back as they put in no deposit. 
So then there is £45k left but a £50k mortgage owed. So then each person would pay half each of the £5 shortfall. So the person who put in the deposit would pay £7.5k in total and the person who put in nothing would pay £2.5.

So why should the person putting in the bigger deposit pay more in fees when they sell? I think it should be 50/50 as they owned the house 50/50



The way i have said originally works for all deposit percentage and any increase or decrease in prices. 

Like I said if you take off the deposit amount first then it can lead to a situation where the person with the lower deposit benefit more. I can show this as an example if you want as I have it in a spreadsheet so can do any combination you want.

But I think you will understand now as you just forgot about negative numbers when doing my calculation. You also forgot about the mortgage shortfall doing it your way.

They won't own the house 50:50 when the person that puts in 50% and the deed says they gets 50% back first, they own that 50% + the share of the mortgage paid.
 
50% + 1/2 the mortgage means they bought 75%,  the person with no deposit only buys 25%

The 50% they own from their cash is only worth £45k now not £50k 

50% of the loss belongs to the 50% bought with cash the other 50% to the 50% that used borrowing 

When you buy a house tentants in common then it's perfectly possible for two people to legally own a house 50% each and then have a declaration of trust stating how the money is split when the house is sold. 

So again like I said in my example they buy the house 50/50 because they want to split all costs and own it together but there is a difference in deposit initially so the declaration of trust accounts for that when it's sold.


Your now quoting a different situation where one person owns 75% and one person owns 25% and that will obviously have different splits.


So there was no mistake in my initial comment like you stated and you were just confused about the ownership of the house so hopefully this post has cleared it up.

You explanation of the deed of trust is not owning 50:50 if the person that puts down 50% get 50% back first.

Don't compound your initial error.

Edit:
If they get 50% then 1/2 the rest after the mortgage the deed gives them 75%

Please do some research about house ownership if you don't understand because you are wrong.

Your getting confused again about what a declaration of trust is and what it is for. Yes a declaration of trust can specify what shares a property is owned in but it can also be used for many other things.
A declaration of trust in my scenario is being used to specify what happens to the money when the house is sold. So the house is owned 50/50 but the declaration of trust only comes into play effectively when the house is sold and then it determines how the money is split. It does not determine the percentage ownership of the property.


In your edit you are correct if the property is paid off then the person will get 75% of the sale fees and the other person will get 25% of the sale fees because they each paid half the mortgage then any costs of selling will be split between them and taken out of each of their shares before they get the money. But that does not change the fact that they still own the property 50/50 as the declaration of trust only specifies what percentage of the money they get once the property is sold not the percentage of ownership. 


If your still struggling to understand then think about how a mortgage works. When a property is sold the mortgage has to be paid off but the bank don't own any part of the property. So that shows you don't need to own a specific amount of the property just because you have a beneficial interest in it. 

getmore4less

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

classic error in how it should be done.

The proceeds after costs but before mortgage gets paid 40%,  5%, rest(less after mortgage) 50:50.

if they pay the mortgage 50:50

How is that an error?

If you sell the house for the same price then each person get's back their original deposit and it goes up and does as the value increases. If you take off the fixed costs first then that means both deposits are reduced by an equal percentage based on the amount but then the person with the lower deposit amount will benefit more when the rest is split 50/50 and the person with the larger person would lose out in the 50/50 split.

So that isn't fair to me. 

It fair because the cost are spread between all the portions that bought the place in proportion to the share they own


If you just allocate to the mortgage it skews the payout so the smaller deposit end up paying a bigger proportion of the cost.

Any algorithm has to work for all values.

Eg buy £100k
One deposit £50k, mortgage £50k split. 50:50
Sell for £100k £10k costs, £90k net before mortgage

Deposit person should get back £45k not £50k which you propose.

Well that doesn't mean I made an "error" that's just a difference in opinion.

In my example when two people buy the house together and own it 50% each then they should pay 50% of the purchase costs each and then 50% of the sale costs each. The are also paying 50% of the mortgage costs each because they share the home equally. 

The only difference is the original deposit amount which to protect each party they get back the share they each get in a percentage of the house. Now reading what you said i think you agree with that you just seem confused on the math.


In your example they buy for £100k and one person puts in £50 so 50% of the deposit. 
Let's say they sell right away so don't pay even 1 mortgage payment to make it easier.

So they sell for £100k and 50% in trust goes to person 1 and 0% goes to person 2 (which is what their deposits were). They then split sale costs equally so that's -£5 each so person 1 gets £45k and person 2 owes £5k.


But let's do it your way:

So they sell for £100 and take off £10 costs with £90 left. Person 1 gets £45k deposit back and person 2 gets 0% back as they put in no deposit. 
So then there is £45k left but a £50k mortgage owed. So then each person would pay half each of the £5 shortfall. So the person who put in the deposit would pay £7.5k in total and the person who put in nothing would pay £2.5.

So why should the person putting in the bigger deposit pay more in fees when they sell? I think it should be 50/50 as they owned the house 50/50



The way i have said originally works for all deposit percentage and any increase or decrease in prices. 

Like I said if you take off the deposit amount first then it can lead to a situation where the person with the lower deposit benefit more. I can show this as an example if you want as I have it in a spreadsheet so can do any combination you want.

But I think you will understand now as you just forgot about negative numbers when doing my calculation. You also forgot about the mortgage shortfall doing it your way.

They won't own the house 50:50 when the person that puts in 50% and the deed says they gets 50% back first, they own that 50% + the share of the mortgage paid.
 
50% + 1/2 the mortgage means they bought 75%,  the person with no deposit only buys 25%

The 50% they own from their cash is only worth £45k now not £50k 

50% of the loss belongs to the 50% bought with cash the other 50% to the 50% that used borrowing 

When you buy a house tentants in common then it's perfectly possible for two people to legally own a house 50% each and then have a declaration of trust stating how the money is split when the house is sold. 

So again like I said in my example they buy the house 50/50 because they want to split all costs and own it together but there is a difference in deposit initially so the declaration of trust accounts for that when it's sold.


Your now quoting a different situation where one person owns 75% and one person owns 25% and that will obviously have different splits.


So there was no mistake in my initial comment like you stated and you were just confused about the ownership of the house so hopefully this post has cleared it up.

You explanation of the deed of trust is not owning 50:50 if the person that puts down 50% get 50% back first.

Don't compound your initial error.

Edit:
If they get 50% then 1/2 the rest after the mortgage the deed gives them 75%

Please do some research about house ownership if you don't understand because you are wrong.

Your getting confused again about what a declaration of trust is and what it is for. Yes a declaration of trust can specify what shares a property is owned in but it can also be used for many other things.
A declaration of trust in my scenario is being used to specify what happens to the money when the house is sold. So the house is owned 50/50 but the declaration of trust only comes into play effectively when the house is sold and then it determines how the money is split. It does not determine the percentage ownership of the property.


In your edit you are correct if the property is paid off then the person will get 75% of the sale fees and the other person will get 25% of the sale fees because they each paid half the mortgage then any costs of selling will be split between them and taken out of each of their shares before they get the money. But that does not change the fact that they still own the property 50/50 as the declaration of trust only specifies what percentage of the money they get once the property is sold not the percentage of ownership. 


If your still struggling to understand then think about how a mortgage works. When a property is sold the mortgage has to be paid off but the bank don't own any part of the property. So that shows you don't need to own a specific amount of the property just because you have a beneficial interest in it. 

Legal ownership is always joint it can't be done any other way.

TIC does not really exist for legal ownership.

The trust describes the beneficial ownership and that is what is important to deciding what each gets 

To split the costs 50:50 when the beneficial ownership is not is just wrong.

No sensible person would allow themselves to be stitched up like that even though you can write them that way to give a greater benefit to the one with the bigger deposit.

Any algorithm should work for all values.

99% deposit, split the 1% mortgage  shows how disproportionate using 50:50 costs are.

If the money was raised 50% then 2 lots of 25% borrowing from parents  it clearly 75:25 changing the borrowing to a mortgage does not change that.

Tokmon

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

getmore4less said:

Tokmon said:

BMTH said:

Brie said:

I would have thought the fairest thing is to get a legal agreement that shows the relative amounts of deposit at the time of purchase.  

So say you found a rose covered cottage for a mere £100k...(I know, we all wish....)   If she has £40k then that means she "owns" 40% of the house.  If you have £5k then you "own" 5%.  And the bank owns the other 55%.  

Should things go wrong and you split (but hopefully that won't happen) and sell the place she gets 40%, you get 5% and then you split the rest 50/50 or based on your respective contributions to both mortgage and upkeep.  

The important bit is to have it documented and there's a solicitor involved.  And you should both have wills.

Ah, this makes sense. I assume this would be a seperate agreement to actually buying the house? At least this still allows us to buy using both of our deposits combined and not necessarily miss out so to speak. Thank you, very helpful.

As mentioned you want to get a "declaration of trust". What Brie says is close to being right but the bank doesn't own any part of the house even when buying with a mortgage.

Let's use the example above of a £100k house

You could own the house 50/50 but have a declaration of trust that says when sold 40% goes to your partner 5% goes to you (as this is the percentage of the house each of your deposits are worth) then anything left over is split 50/50 between you after all fees of selling (assuming you each pay half of the mortgage).

This means if house prices go up or down you each benefit or lose from the based on the percentage you put in the from the start so is the fairest way to do it. 

classic error in how it should be done.

The proceeds after costs but before mortgage gets paid 40%,  5%, rest(less after mortgage) 50:50.

if they pay the mortgage 50:50

How is that an error?

If you sell the house for the same price then each person get's back their original deposit and it goes up and does as the value increases. If you take off the fixed costs first then that means both deposits are reduced by an equal percentage based on the amount but then the person with the lower deposit amount will benefit more when the rest is split 50/50 and the person with the larger person would lose out in the 50/50 split.

So that isn't fair to me. 

It fair because the cost are spread between all the portions that bought the place in proportion to the share they own


If you just allocate to the mortgage it skews the payout so the smaller deposit end up paying a bigger proportion of the cost.

Any algorithm has to work for all values.

Eg buy £100k
One deposit £50k, mortgage £50k split. 50:50
Sell for £100k £10k costs, £90k net before mortgage

Deposit person should get back £45k not £50k which you propose.

Well that doesn't mean I made an "error" that's just a difference in opinion.

In my example when two people buy the house together and own it 50% each then they should pay 50% of the purchase costs each and then 50% of the sale costs each. The are also paying 50% of the mortgage costs each because they share the home equally. 

The only difference is the original deposit amount which to protect each party they get back the share they each get in a percentage of the house. Now reading what you said i think you agree with that you just seem confused on the math.


In your example they buy for £100k and one person puts in £50 so 50% of the deposit. 
Let's say they sell right away so don't pay even 1 mortgage payment to make it easier.

So they sell for £100k and 50% in trust goes to person 1 and 0% goes to person 2 (which is what their deposits were). They then split sale costs equally so that's -£5 each so person 1 gets £45k and person 2 owes £5k.


But let's do it your way:

So they sell for £100 and take off £10 costs with £90 left. Person 1 gets £45k deposit back and person 2 gets 0% back as they put in no deposit. 
So then there is £45k left but a £50k mortgage owed. So then each person would pay half each of the £5 shortfall. So the person who put in the deposit would pay £7.5k in total and the person who put in nothing would pay £2.5.

So why should the person putting in the bigger deposit pay more in fees when they sell? I think it should be 50/50 as they owned the house 50/50



The way i have said originally works for all deposit percentage and any increase or decrease in prices. 

Like I said if you take off the deposit amount first then it can lead to a situation where the person with the lower deposit benefit more. I can show this as an example if you want as I have it in a spreadsheet so can do any combination you want.

But I think you will understand now as you just forgot about negative numbers when doing my calculation. You also forgot about the mortgage shortfall doing it your way.

They won't own the house 50:50 when the person that puts in 50% and the deed says they gets 50% back first, they own that 50% + the share of the mortgage paid.
 
50% + 1/2 the mortgage means they bought 75%,  the person with no deposit only buys 25%

The 50% they own from their cash is only worth £45k now not £50k 

50% of the loss belongs to the 50% bought with cash the other 50% to the 50% that used borrowing 

When you buy a house tentants in common then it's perfectly possible for two people to legally own a house 50% each and then have a declaration of trust stating how the money is split when the house is sold. 

So again like I said in my example they buy the house 50/50 because they want to split all costs and own it together but there is a difference in deposit initially so the declaration of trust accounts for that when it's sold.


Your now quoting a different situation where one person owns 75% and one person owns 25% and that will obviously have different splits.


So there was no mistake in my initial comment like you stated and you were just confused about the ownership of the house so hopefully this post has cleared it up.

You explanation of the deed of trust is not owning 50:50 if the person that puts down 50% get 50% back first.

Don't compound your initial error.

Edit:
If they get 50% then 1/2 the rest after the mortgage the deed gives them 75%

Please do some research about house ownership if you don't understand because you are wrong.

Your getting confused again about what a declaration of trust is and what it is for. Yes a declaration of trust can specify what shares a property is owned in but it can also be used for many other things.
A declaration of trust in my scenario is being used to specify what happens to the money when the house is sold. So the house is owned 50/50 but the declaration of trust only comes into play effectively when the house is sold and then it determines how the money is split. It does not determine the percentage ownership of the property.


In your edit you are correct if the property is paid off then the person will get 75% of the sale fees and the other person will get 25% of the sale fees because they each paid half the mortgage then any costs of selling will be split between them and taken out of each of their shares before they get the money. But that does not change the fact that they still own the property 50/50 as the declaration of trust only specifies what percentage of the money they get once the property is sold not the percentage of ownership. 


If your still struggling to understand then think about how a mortgage works. When a property is sold the mortgage has to be paid off but the bank don't own any part of the property. So that shows you don't need to own a specific amount of the property just because you have a beneficial interest in it. 

Legal ownership is always joint it can't be done any other way.

TIC does not really exist for legal ownership.

The trust describes the beneficial ownership and that is what is important to deciding what each gets 

To split the costs 50:50 when the beneficial ownership is not is just wrong.

No sensible person would allow themselves to be stitched up like that even though you can write them that way to give a greater benefit to the one with the bigger deposit.

Any algorithm should work for all values.

99% deposit, split the 1% mortgage  shows how disproportionate using 50:50 costs are.

If the money was raised 50% then 2 lots of 25% borrowing from parents  it clearly 75:25 changing the borrowing to a mortgage does not change that.

Tenants in common allows legal ownership to be split to specific percentages of whatever you want.

A declaration of trust doesn't describe "beneficial ownership" in my example it describes what happens when the house is sold with the money and has no effect until that action happens. 

My algorithm works for every value and I have a spreadsheet to prove that.


But you have obviously never been in a romantic relationship or married because when that happens most people don't care who put what into the house to start with all they care about is they both own the house and both contribute as fairly as they can.
When two people get together they often have different amounts of money to put into a house so it makes sense for them to both put in as much as they are happy to so the mortgage is lower. It then makes sense for them to have a 50/50 ownership and pay all costs half each so they are jointly involved in the house. Then the declaration of trust is there to protect them if it goes wrong early on and the house is sold.
If everything goes to plan it will never come into effect and their finances will become more and more joint.


Fair enough if you disagree doing it that way as you have a difference of opinion how finances should work in a relationship.


But I definitely didn't make any error. You originally thought I made an error because you didn't understand any you obviously can't admit when your wrong because you keep changing your reason why it's "wrong". So now it's ended up I made an "error" because my opinion on joint finances is different to yours which is very arrogant to think no other opinions are valid.

getmore4less

You need to update your understanding of legal and beneficial interest

the land registry has a decent explanation.

https://www.gov.uk/government/publications/private-trusts-of-land/practice-guide-24-private-trusts-of-land


You can do joint finances how you like but this method does not protect the interests of both parties equitably which is the purpose of such a agreement.

If you include the purchase cost and ongoing maintenance and improvement 50:50 it skews it very much in favour of the larger deposit 

What you would get back is your beneficial interest.

if you are including purchase and improvements 50:50

Try £100k house £50k deposit  split 50:50 £50k mortgage,  £10k buying costs, £20k improvements £10k selling
new value £140k 

no deposit person has put in a total of £45k of the total and they should get that back(less their share of the mortgage net £20k.

Your 50% first they get back £35k less the mortgage  net £10k, been done out of £10k

Tokmon

getmore4less said:

You need to update your understanding of legal and beneficial interest

the land registry has a decent explanation.

https://www.gov.uk/government/publications/private-trusts-of-land/practice-guide-24-private-trusts-of-land


You can do joint finances how you like but this method does not protect the interests of both parties equitably which is the purpose of such a agreement.

If you include the purchase cost and ongoing maintenance and improvement 50:50 it skews it very much in favour of the larger deposit 

What you would get back is your beneficial interest.

if you are including purchase and improvements 50:50

Try £100k house £50k deposit  split 50:50 £50k mortgage,  £10k buying costs, £20k improvements £10k selling
new value £140k 

no deposit person has put in a total of £45k of the total and they should get that back(less their share of the mortgage net £20k.

Your 50% first they get back £35k less the mortgage  net £10k, been done out of £10k

Yes I'm probably mixing my terms when it comes to the ownership. To clarify after reading that document their beneficial interests will be held as tenants in common with 50% each. The declaration of trust will detail what happens to the money when the property is sold.




Using your example above let's use Person 1 with 50% deposit and Person 2 with 0% deposit.

Person 1 pays £60K total into the house (50K deposit plus half of improvements)
Person 2 pays £10K total (Half of improvements)

Then there is a 50K mortgage which we will assume just gets paid off in full when sold for 50K.

So the house is sold for £140K which means person 1 gets £70k back (50%)
Person 2 get's 0% back as they put in no deposit
Then there is 20K left to split so there is 10K each.

This means person 1 ends up with 60K and person 2 ends up with 10K. which is the exact amounts that they put into the house so it's fair.

I've excluded the buying and selling costs from that example so you can see how it works. The buying and selling costs are fixed costs which are unrelated to the value of the house. So when the house is sold they pay half each as that is fair as they both owned and lived in the house. 


What you are proposing is that the person with the bigger deposit pay more buying and selling costs which i don't think is fair at all.

Imagine if you decided to buy a house with someone and they said "Actually i have more money saved than you so i can put in a bigger deposit and save us both interest on the mortgage". Then you reply with "That's great but as your putting in more money then you also have to pay more of the buying and selling costs". 
I'm sure they wouldn't find that fair at all!


Like i said if your buying a house and one person wants to put in a bigger deposit and then pay all other costs 50/50 then my way makes that happen.

You obviously disagree and think each person should pay in a proportion of the costs based on the proportional value of the deposit. That may work for family members buying together or friends but in a relationship finances are more shared for most people and they don't want to do it like that which is why it's so common for people to pay the mortgage and all costs 50/50.