Joint Mortgage: ‘Buying’ more equity from Partner

wonky101

I joined onto my partners mortgage and we are now Tennants in common. A Declaration of trust is in place to protect their initial deposit and equity before splitting the profits; should we split and sell house.

They now wish for me to ‘purchase’ this equity for cash in order to support a large purchase. So we can re-write the declaration for me to have the majority equity to make up the total value of the cash paid. 

What needs to be considered here? 

Lavendyr

A solicitor. You need one. 

wonky101

Thank you. Do you mean in addition to the one I presume we need to re-write the DOT. Should I be seeking independent financial advice?

I understand that I would be losing the interest on these ‘would be’ savings so have pointed out that I would want this to be offset/ accounted for in my reimbursement should I decide to support the purchase. 

Exodi

Just draw up a new DoT and have it witnessed.

If the changes are relatively straight forward (e.g. increasing a number) some folk may just update the DoT themselves and have it properly witnessed. 

wonky101 said:

I joined onto my partners mortgage and we are now Tennants in common. A Declaration of trust is in place to protect their initial deposit and equity before splitting the profits; should we split and sell house.

They now wish for me to ‘purchase’ this equity for cash in order to support a large purchase. So we can re-write the declaration for me to have the majority equity to make up the total value of the cash paid. 

What needs to be considered here? 

Could you be clearer, as your post is very confusing about the current situation and what you want, for example what do you mean by "initial deposit and equity" - presumably you mean just initial deposit? The way you use the word equity is also confusing and 'majority equity' - are you suggesting changing the 'split' from 50:50 or what? Not sure.

To keep it simple for what (I think) you're asking:

E.g.:
Person A puts in £50k. Person B puts in £0k.
Both pay mortgage equally.

Current DoT: £50k is returned to person A, then remaining proceeds from the sale are split 50:50.

In this example (assuming you're person B ) there's no reason you couldn't give Person A £20k (for example) and change the DoT to say - Person A gets£30k, then remaining proceeds are split 50:50.

As solicitors will tell you when you draft a DoT (as I'm sure they did the first time you did) the key is to keep it straightforward, so there is less chance of misinterpretation down the line.

Exodi

wonky101 said:

Thank you. Do you mean in addition to the one I presume we need to re-write the DOT. Should I be seeking independent financial advice?

I understand that I would be losing the interest on these ‘would be’ savings so have pointed out that I would want this to be offset/ accounted for in my reimbursement should I decide to support the purchase. 

 They're not suggesting multiple solicitors - you are not doing a transfer of equity, you already hold the property as tenants in common with a deed of trust. You just need to update the deed of trust - for this you will need either 0 or 1 solicitor, depending on how complicated you make it.

Whether you seek independent financial advice depends on whether you feel comfortable with the agreement. Solicitors only act on your instruction.

Your word about losing interest on hypothetical savings which could be offset in reimbursement is a tad concerning if you are in a relationship with the other tenant in common.

If the DoT is simple (whereby the initial deposit is not increasing in line with house prices) then I expect the other tenant in common to rightfully argue that they are not earning interest on their current deposit.

I'm hopeful you're not in a relationship with this person.