Deciding how to split house equity after separation
in MoneySaving mums
16 replies 2K views
Hi, myself and my partner have come to the decision to separate. We have been together for 20 years but not married, 3 school age children.
We are trying to work out how to afford to live separately, would like to avoid solicitors etc if possible.
I'd like to stay in the house but can't afford to buy him out. I could probably just about afford the mortgage on my own but it'd be very tight. I am the higher earner, have always earned about twice as much as him. I think the only option is for us to sell the house.
The kids will stay with me, he might have them for occasional visits but he wants to move quite far away. I'm not relying on getting any maintenance for various reasons.
He is self employed and works from home, his job requires him to have equipment where a flat or house share would not be possible.
So we have about £130k equity in the house. He thinks he should be entitled to half. I think it should be significantly less, mainly becuase I need to buy a reasonably sized house in the area we are currently in, to keep as much stability for the children as possible. (I've also contributed a lot more financially over the years but won't go down that route and can't really prove it).
The equity will be my deposit for a new house and what percentage I can have will be the difference between the kids having their own bedrooms (which they are used to) and whether we can stay in the same nice area or have to move somewhere quite rough.
How do we decide what is a fair split? is it worth involving a solicitor etc or are they really that expensive and I'd loose even more money when things are going to be really tight anyway?
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50:50 would be the starting point personally, but then I'd expect higher maintenance payments to be made after that.
If you are proposing a counter offer to this due to kids being at home which is reasonable, then could you state small amount now for him but when the kids turn 18 you downsize or pay him an amount that either levels it up or slightly over as he won't benefit from growth in value of houses, lower interest if he had a bigger deposit etc. Would that potentially persuade him without unsettling kids as much?
Sadly, there is never going to be a clear answer on what's fair. You can make a case for most splits between 75:25 i expect. The question is probably if you can compromise or if not do it with some guidance from a solicitor without incurring to many costs on legal advice.
I'd strongly encourage you to get a legally drawn up agreement: you may be willing to trust each other now, but things can change.
I feel like you would always be able to claim maintenance from him, regardless of what equity split you agreed - is it possible to legally stipulate that the equity is in lieu of maintenance obligations? If not, I wouldn't blame him for prefering to hold on to the equity and pay it through a formal or informal maintenance arrangement, than relinquish it and still potentially get hit by maintenance also down the road.