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    • silvercar
    • By silvercar 17th Jan 11, 5:26 PM
    • 38,884 Posts
    • 162,332 Thanks
    silvercar
    • #2
    • 17th Jan 11, 5:26 PM
    • #2
    • 17th Jan 11, 5:26 PM
    There are many many threads on the housing board where people have come up against this problem.

    Imagine that the property was bought on a 125% mortgage or has dropped in value. Then your profit becomes a loss and how to divide up the loss becomes more difficult. Often there is not enough money left to clear the mortgage and repay the deposit to the one that provided it.

    Sometimes there is even negative equity and the partners can't sell unless they can find more money. Then one wants to buy the other out and want a payment for taking over the others liability.

    Agreeing when a sale should happen is just as important as deciding how to split the proceeds.
    • cillataz
    • By cillataz 17th Jan 11, 5:27 PM
    • 2 Posts
    • 1 Thanks
    cillataz
    • #3
    • 17th Jan 11, 5:27 PM
    mortgage
    • #3
    • 17th Jan 11, 5:27 PM
    i paid £140,000 depost, other half had £50,000- i pay 2/3 of mortgage, he pays 1/3... If we split we have our deposits back and split the profit ie 2/3 to me and 1/3 to him. We have no children, we keep other money seperate as i earn more!
    We have signed deed of trust to this effect.
  • 19sunflower76
    • #4
    • 17th Jan 11, 5:50 PM
    Re splitting a house
    • #4
    • 17th Jan 11, 5:50 PM
    I have worked most of my married life yet i have also been unable to work full time due to having children which we both wanted adn that i provided the child care for whilst he worked... how would you say that would affect the split since obviously I have not been able to put as much money in but i also provided free child care... and i am now left with the children and no house
    • amjane
    • By amjane 17th Jan 11, 5:52 PM
    • 8 Posts
    • 3 Thanks
    amjane
    • #5
    • 17th Jan 11, 5:52 PM
    Non-contributors
    • #5
    • 17th Jan 11, 5:52 PM
    Your methods listed don't take into account those people who have not contributed to the mortgage but take care of other things like providing the food etc.... I have not put a penny into my husband's house in mortgage payments but have contributed with grocery shopping etc. After 10 years of marriage are you saying I shouldn't be entitled to any money from the house? How could I then afford to start over again?

    Fortunately I deeply love my husband and have no intention of going anywhere but wanted to make my point.
    • savvy06
    • By savvy06 17th Jan 11, 5:55 PM
    • 29 Posts
    • 15 Thanks
    savvy06
    • #6
    • 17th Jan 11, 5:55 PM
    • #6
    • 17th Jan 11, 5:55 PM
    My X husband bought the house and paid the mortgage, I gave up my job to move to his part of the country and then ran the house - helped him in his business and gave birth to and cared for his 3 children- I had no income only contributed a rental from my house then the (smal amount) of capital raised when it was sold.
    When we parted we split it 50/50 - although his "financial contribution" was much bigger, my contribution was my support and childcare, this allowed him to earn and pay the mortgage. .... Is one worth more???
    • Frogletina
    • By Frogletina 17th Jan 11, 6:17 PM
    • 3,198 Posts
    • 11,572 Thanks
    Frogletina
    • #7
    • 17th Jan 11, 6:17 PM
    • #7
    • 17th Jan 11, 6:17 PM
    When I bought a house with my partner, I paid a deposit equal to 3/10 of the purchase price but he had no money for a deposit. I paid the mortgage on the remaining 2/10 of my share and completely paid off my half of the mortgage within a few years, and he continued to pay the mortgage for his half of the house.

    When we split - the house was valued and I paid off the remaining mortgage and gave him cash to the value of 50% of the house less the remaining mortgage. Had we tried to sell the house, we would not have got the valuation price, especially when I put it up for sale later and found it had subsidence!

    Was this the fairest way? I have often wondered. It seemed to be, he had no worries over it - we both worked and split all bills other than this 50/50.
    Not Rachmaninov
    But Nyman
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  • Jen151
    • #8
    • 17th Jan 11, 6:21 PM
    • #8
    • 17th Jan 11, 6:21 PM
    We bought our flat for £90,200 in 2007. Its now worth maybe £95,000 - if we're lucky, maybe more like £91,000. For a deposit I put in £8k of my money, and we borrowed £10k loan of parents money.

    All the mortgage payments have been equally split between us over the duration of living here & we both earn around the same wage

    We want to sell the flat, buy a new house, give my parents back there money. I have no idea how the money side of this will work though, especially if we lose money on the flat? Any advice would be welcome!
    ~ Team Sticky ~
    • HappyMJ
    • By HappyMJ 17th Jan 11, 6:50 PM
    • 20,595 Posts
    • 17,201 Thanks
    HappyMJ
    • #9
    • 17th Jan 11, 6:50 PM
    • #9
    • 17th Jan 11, 6:50 PM
    What would most probably happen is the solicitor gets most of it. If this were to apply to me then I would give Jen her £40,000 deposit back and split the rest 50/50. So Jen gets £70,000 and Phil gets £30,000. That to me would be quite fair and takes into account any period of time that one of the partners can't work and therefore is not penalized by that.
    • Gorgeous George
    • By Gorgeous George 17th Jan 11, 6:51 PM
    • 7,797 Posts
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    Gorgeous George
    Whatever sum you come up with, it only works if both parties agree. If one party feels hard done by there may be no sale as both signatures are required. If the disgruntled party doesn't care about his/her credit score, they could have little interest in avoiding repossession.

    The best thing is to stay single but negotiation is the key if a couple splits. What I don't understand is the number of people who cannot commit to marriage but readily sign a JOINT mortgage for a huge sum of money.

    GG
    Last edited by Gorgeous George; 17-01-2011 at 6:57 PM.
  • jamesd
    You could usefully start by doing a net present value calculation for the streams of payments involved. That would equalise the deposit and ongoing payment contribution types and get something closer to the split of money invested. Then your proportionate split comes closer to reflecting the investment that each has chosen to make in the property.

    I'm ignoring divorce splitting and other potential spousal relationship issues. Also ignoring differing opportunity costs for those who would have invested the money compared to those who would spend it or stick it in a savings account if they weren't using it for this purpose.
    • VT82
    • By VT82 17th Jan 11, 11:48 PM
    • 1,032 Posts
    • 874 Thanks
    VT82
    Jen paid a 20% deposit on the house. This was paid before a mortgage was involved and she owns this outright. She therefore gets 20% of the sale price before the repaying the mortgage is considered.

    The remaining equity is split in the ratio of who paid what of the mortgage.

    So Jen gets 20% x 250k = 50k outright
    plus 1/3 x (250k - 150k - 50k) = 1/3 x 50k = c. 17k

    The remaining c. 33k goes to Phil.

    If the house value had gone down by 50k, Jen would still get 20% of the sale price, albeit less than her initial deposit, and her share of the small negative equity would come off her return. Phil would be in slightly more negative, and as he had no equity at the outset, he would have to pay money in when the house sells to release himself from it.

    Calculating a 'return on the investment' is pointless in this case, especially with Martin's crude method - Jen took a punt on property prices going up quicker than savings interest by agreeing to put in the full deposit. Calculating a return in Martin's crude way does not take into account the time value of money. If Jen hadn't put in 40k when she did, she could have been earning (say) 5% interest on it in the time between them buying and selling the house.

    Phil is more leveraged - so he gains more relative to what he invests from the house going up in value, and loses more when the house goes down in value. The two investments will never be comparable.

    I'm surprised if those really were the only three scenarios Martin could come up with. As someone who is using the above method to decide how much we get from upcoming sale of our house currently in small positive equity (and with me being the one who put the deposit in), reading Martin's suggestion of the 'Equal Split' made my blood run cold.
  • kwinny
    unfriendly split
    what if two siblings bought a house and sibling A left the property and rented elsewhere and did not pay any further to the house. Sibling B has bad debts which is affecting sibling A's credit rating and sibling A wants a new mortgage elsewhere. How can sibling A force a sale or remove themselves from the origional mortgage ? we have heard that you can get an annulment from a mortgage if you no longer pay towards it is this true ?
    • MSE Martin
    • By MSE Martin 18th Jan 11, 8:37 AM
    • 8,115 Posts
    • 42,285 Thanks
    MSE Martin
    I'm surprised if those really were the only three scenarios Martin could come up with. As someone who is using the above method to decide how much we get from upcoming sale of our house currently in small positive equity (and with me being the one who put the deposit in), reading Martin's suggestion of the 'Equal Split' made my blood run cold.
    Originally posted by VT82
    Hi

    Do note I said I could only come up with three 'simple' scenarios - one key difference here as I note in the blog, is I have automatically chosen to repay the mortgage first then divvy up - but I accept this is still a choice. Your method is interesting, the problem here is there are no rights and wrong.

    The equal split method is certainly not one I'd personally advocate - yet reading the facebook discussion on this a common suggestion is "take what you put in to start with then divide the rest in half"

    And this is the problem - there are many ways to calculate this, each favour one party or the other and have many arguments to them. Never easy.
    Martin Lewis, Money Saving Expert.
    Please note, answers don't constitute financial advice, it is based on generalised journalistic research. Always ensure any decision is made with regards to your own individual circumstance.

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    • Regshoe
    • By Regshoe 18th Jan 11, 11:53 AM
    • 237 Posts
    • 157 Thanks
    Regshoe
    Equal...
    Under the conditions of Martin's example my preference would be for the Proportionate split - as I think you should recognise the value of the deposit, as it is necessary to have one and a larger deposit goes towards reducing the rate received. Though as other's have pointed out there are a number of issues in relation to negative equity etc.

    These difficulties contribute to my aims to buy a house and rent out a room to a friend as a lodger rather than split a mortgage. Clearly this leaves me with a larger liability and presumably a higher average outgoing each month, but it also gives me much greater control and I benefit from any increases in house value. With the tax free allowance through the rent a room scheme you can receive quite a decent amount each month, in all likelihood more than you would realistically be asking for until you had a house value in excess of around £150k (unless potentially you had two lodgers).

    Also to all those who have mentioned their non-financial contributions as a housewife (etc) Martin did point out at the beginning of his blog that there are already procedures in this case to recognise this input (whether they are fair or not is another issue!)
  • antonia1
    If a person is buying as a house-share with friend/sibling etc as an alternative to renting, I prefer the scenario where your proceeds are proportional to the percentage you put in. It is very simplistic, but as has been pointed out it is important to get these things in writing before signing a joint mortgage. It is also less likely in these cases that one person has supported the other financially, either though food / bill payment or during maternity leave.

    However, in terms of marriage (either official or common-law) I think that all accumulation of wealth during the marriage (or time living together) should be split equally. A marriage is, after all, supposed to be a partnership where any wealth accumulated by one partner is likely to have been supported by the other, whether that is financially, emotionally, or by (for example) being a stay-at-home parent to raise children. So in this case, you both get out what you put in as a deposit, plus half of any profit.
    If saving money is wrong, I don't want to be right. William Shatner

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    • Katie-Kat-Kins
    • By Katie-Kat-Kins 18th Jan 11, 2:17 PM
    • 1,692 Posts
    • 1,784 Thanks
    Katie-Kat-Kins
    Personally I think that it should be a legal requirement that in all cases where houses are owned jointly with a mortgage between people who are not married there be some kind of legally binding agreement in place that covers how to terminate and split the house.

    I also think that people chould be better advised in relation to holding property as joint tennants or tennants in common as this can make the ultimate division of the property much easier.

    My now DH bought a house with a friend with a mortgage and they held the property as joint tennants with a joint mortgage. Just a matter of weeks after completion the friend changed his mind went to live elsewhere stopped paying the mortgage or any bills, never to be seen again. DH was left with a mortgage for which they were jointly and severally liable and all the bills - they had bought jointly as neither could afford to buy alone so he was saddled with unaffordable bills and mortgage repayments - Nightmare.

    Personally I think the legal advice was negligent and they should have been advised to have separate mortgages and hold as tennants in common instead. Many people living with someone to whom they are not married are unaware that they can do this and that it can be advantageous to both parties as their interests are protected. It also means that you can will your share separately upon your death rather than it going automatically to the survivor.
    • Katie-Kat-Kins
    • By Katie-Kat-Kins 18th Jan 11, 2:19 PM
    • 1,692 Posts
    • 1,784 Thanks
    Katie-Kat-Kins
    If a person is buying as a house-share with friend/sibling etc as an alternative to renting, I prefer the scenario where your proceeds are proportional to the percentage you put in. It is very simplistic, but as has been pointed out it is important to get these things in writing before signing a joint mortgage. It is also less likely in these cases that one person has supported the other financially, either though food / bill payment or during maternity leave.

    However, in terms of marriage (either official or common-law) I think that all accumulation of wealth during the marriage (or time living together) should be split equally. A marriage is, after all, supposed to be a partnership where any wealth accumulated by one partner is likely to have been supported by the other, whether that is financially, emotionally, or by (for example) being a stay-at-home parent to raise children. So in this case, you both get out what you put in as a deposit, plus half of any profit.
    Originally posted by antonia1

    For the avoidence of doubt there is no such thing as common law marriage. Couples living together unmarried should take legal advice as to what would happen to their home should they split up and they should consider a deed of trust or co-habitation agreement.
    • veruccasalt
    • By veruccasalt 18th Jan 11, 5:22 PM
    • 1,409 Posts
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    veruccasalt
    If I was the new Mrs MSE, I would be a bit alarmed by the subject matter in this blog.....
    “All you need is love. But a little chocolate now and then doesn't hurt.” Charles M Schulz
  • sallymcp
    its never going to be fair
    What if one partner has paid everything, the deposit the payments on the morgage, all the bills, and the other person only pays for their own expenditure such as a car or credit card bill, should the person who has paid everything get everything?

    or should it still be a equal split?
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