Contributions

moneysaver1978

Sarahspangles said:

You also need to factor in things like the frictional costs of purchase and sale - significant ‘up front’ costs.  Do you also split those pro rata?  What if you split, how is the one leaving paid out?

You can simplify things by sticking to 70/30 for everything to do with the capital value in the house and servicing the mortgage, but life happens - splits, job changes, babies, inheritance - and it will be less stressful if you think through some of the scenarios in advance.

Great points, Sarah! The upfront costs like legal fees, conveyancing, survey, stamp duty, etc. are split at 50/50 as we both thought this as "consumables" (like bills) but happy to be corrected if this is better handled like being tied to the deposit/mortgage split like 70/30 or 65/35.

Thank you all for your posts - these are really helpful and definitely food for thought!

We have no plans for nor have children (we are both too old now!) so there would be no "running the household". Splitting the mortgage repayments 50/50 is sadly not an option as it would be too much for my OH (unless she gets a pay raise in near future).

So based on the answers, it does sound like a 65/35 split for everything (deposit, mortgage repayments, any house improvement projects, etc.) is the way forward in terms of simplicity.

I guess we now just need to figure out if the standard upfront costs should follow the same percentage or should it be treated as consumables.

moneysaver1978

eddddy said:

Perhaps the most flexible approach is to keep a tally of what each partner contributes. Then add up a grand total when you decide to sell.

For example, if you add up the totals and turns out that you've contributed 63% of the total costs and your partner has contributed 37% of the total costs...

... maybe you get 63% of the equity (profit), and your partner gets 37%.

(And I guess any agreement should also mention that if there turns out to be negative equity, you cover 63% of the loss, and your partner covers 37%.)


But given the high levels of inflation at the moment, you should probably apply an 'interest rate' to payments.

As a simple example, let's say the property is sold in 2028 - you have made a payment of £1000 in 2023, your partner has made a payment of £1000 in 2027. The payment in 2023 is 'worth more' than the payment in 2027. (So you should add interest to the 2023 payment.)

 

This is an interesting approach (we both love spreadsheets!) - where would the "interest rate" come from and how would it be applied?

EssexHebridean

Ummm....a household needs some "running" regardless of whether there are children living in it or not - without small people there are less muddy footprints but also less opportunity for offloading small chores in respect of "earning" of pocket money!   

Think about who will be keeping an eye on banking and financial matters, taking note of when payments need making or insurance comparisons need doing, and timing those comparisons, driving forward things like booking of holidays, keeping a note of car servicing, tax and MoT requirements, writing a meal plan and shopping list...lots more too. If you feel you can make an even split down the middle on those sorts of things, and that this will work for you, then a 50/50 split down the middle might work just fine, but if the likelihood is that perhaps the lower earner might take more of  responsibility on that side, then consideration would need to be given to whether it would be fair for the lower earner also to be stretching themselves more for the 50/50 split. (That is also something else to consider too in fact - will the lower earner covering 50% of the bills mean that when the higher earner wants to go for a night out/weekend away/get tickets for something the lower earner might find themselves short on funds to do this - sometimes enabling a matching up of lifestyles is needed). The regular household chores like washing up, sorting out washing, making packed lunches etc are only a small part of "the household" IMO. 

moneysaver1978

EssexHebridean said:

Ummm....a household needs some "running" regardless of whether there are children living in it or not - without small people there are less muddy footprints but also less opportunity for offloading small chores in respect of "earning" of pocket money!   

Think about who will be keeping an eye on banking and financial matters, taking note of when payments need making or insurance comparisons need doing, and timing those comparisons, driving forward things like booking of holidays, keeping a note of car servicing, tax and MoT requirements, writing a meal plan and shopping list...lots more too. If you feel you can make an even split down the middle on those sorts of things, and that this will work for you, then a 50/50 split down the middle might work just fine, but if the likelihood is that perhaps the lower earner might take more of  responsibility on that side, then consideration would need to be given to whether it would be fair for the lower earner also to be stretching themselves more for the 50/50 split. (That is also something else to consider too in fact - will the lower earner covering 50% of the bills mean that when the higher earner wants to go for a night out/weekend away/get tickets for something the lower earner might find themselves short on funds to do this - sometimes enabling a matching up of lifestyles is needed). The regular household chores like washing up, sorting out washing, making packed lunches etc are only a small part of "the household" IMO. 

Haha very true! We are both practical and pretty much even on things like cooking, washing up, shopping list, packed lunches, etc. and I generally pay a bit more on "treats" like a night out or a weekend away.

But in the whole scheme of things, I don't think these (person A does more washing than person B or something) matter too much.