How to split equity in a house if separating?

houseownerworries12

My partner & I bought a house together two years ago. We have been meaning to draw up a document which outlines the amount of money we each put into the house initially and what happens if we separate in the future. However we can’t agree on the calculations! 

To set the scene, the house was purchased for £450,000 and we are joint equal owners. However I put in a £162,000 deposit and my partner put in £31,000. We have a joint mortgage on the remainder which my partner significantly pays more of so that by the end of the mortgage term, we will have 50/50 equity. 

My partner thinks that if we separate and sell the house, the sale proceeds should be divvied up based on the equity we have each put into the house at the point of sale. But in the case of the house value reducing, I would lose a larger amount.

I feel that as we own and live in the house equally, I would like any increase or decrease in value to be shared equally. I am concerned about losing a larger amount of my deposit if we suffer a loss and don’t think this is fair considering I have chosen to pay cash for a larger proportion of my 50% of the house (and helped us get a better interest rate based on LTV).

I have put nearly all of my savings into the house, have a small salary and have a very small pension so this seems risky for me. Whereas my partner earns twice as much as me and has a large pension pot. 

I would love someone to tell me what they think of this conundrum and whether we would be best of paying for some legal advice? We’re not looking to separate, split all other household costs equally and are actually getting married next year but wanted to iron this out beforehand. 

Thanks in advance.

Hoenir

Marriage will override any declaration of trust. You'll be entitled to a share of your partners pension pot then. Starting point will be 50/50 of net assets.

pinkshoes

So if you go with what your DH wants with equity at the point of sale (you 84%), then if you split up 20 years later, have paid off almost the entire mortgage, does that not mean despite him having paid most of the mortgage for 20 years, you'd get a much bigger share than him?!? But if you sold today at £400k, you'd only have £143k equity so your 84% would mean you'd lose far more money. 

Essentially you have put your savings into an "investment" where it could go up or down. 

But... you have bought an investment together where your end goal was to pay half each, so I would say it is more fair that any loss should also be 50/50. 

Herzlos

Basing it on equity put in seems fair. Sure you may lose more if the value drops but you'd gain more if the value increases.

Myci85

It sounds like you own the property as joint tenants instead of tenants in common? I may be wrong, but I think you have to own as tenants in common to be able to own different shares, joint tenants is 50:50.

Albermarle

If you are getting married next year, not sure of the point of this exercise.
Once you are married , what's yours is theirs and what's theirs is yours.