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  • FIRST POST
    • soontobehousebuyer
    • By soontobehousebuyer 16th Jan 20, 4:31 PM
    • 1Posts
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    soontobehousebuyer
    Tenants in common - Shared ownership
    • #1
    • 16th Jan 20, 4:31 PM
    Tenants in common - Shared ownership 16th Jan 20 at 4:31 PM
    Hi everyone - help needed!


    I am looking at buying in the Shared Ownership scheme in London with a good friend.


    We are looking at buying 40% of a property valued at 825,000.


    I am the only one putting a deposit down of 45,000 - my friend is putting down nothing as he has no real savings (except for fees etc). That means we will need a mortgage of 285,000.



    I want to make sure I am doing calculations correctly to agree on the Deed of Trust how much of the property I will own.


    I've worked out I will own 56.82% and he will own 43.18% which sounds like he will own a lot of the property for not putting down any capital?


    Is this correct or am I overthinking it? I want to work out potential profits as and when it does come to sell to see if it's financially viable.


    E.g. if the property was to rise to 900,00 in future, I worked out I would be entitled to 204,552 and he would be entitled to 155,448 with the above %s.


    Is there any other way the entitlement would be decided?


    Any help will be appreciated!
Page 1
    • MovingForwards
    • By MovingForwards 16th Jan 20, 5:09 PM
    • 3,040 Posts
    • 3,641 Thanks
    MovingForwards
    • #2
    • 16th Jan 20, 5:09 PM
    • #2
    • 16th Jan 20, 5:09 PM
    On sale of the property, after sale costs, the first 45k to you, the remainder split 50/50, means you are guaranteed to get your 45k back, unless there is a massive crash.

    Do you have 50% of the fees to make it a little fairer?

    If so, you could do it so you both pay 50% of the fees and his remaining 50% not towards the fees can go as a small deposit contribution.

    E.g first 45k to you, 10k to mate, remainder at 50/50.
    • seradane
    • By seradane 17th Jan 20, 12:07 PM
    • 48 Posts
    • 46 Thanks
    seradane
    • #3
    • 17th Jan 20, 12:07 PM
    • #3
    • 17th Jan 20, 12:07 PM
    E.g. if the property was to rise to 900,00 in future, I worked out I would be entitled to 204,552 and he would be entitled to 155,448 with the above %s.
    Originally posted by soontobehousebuyer
    Yes you can do it that way - but consider that once you take your initial 45k out of the scenario, despite contributing the same after that point, you are now entitled to 159,552 to his 155,448. Is everyone happy with that?

    Or, as MovingForwards says, just take the 45k out first then the rest is divided evenly.
    • Tom99
    • By Tom99 17th Jan 20, 12:59 PM
    • 5,222 Posts
    • 3,683 Thanks
    Tom99
    • #4
    • 17th Jan 20, 12:59 PM
    • #4
    • 17th Jan 20, 12:59 PM

    I am looking at buying in the Shared Ownership scheme in London with a good friend.
    We are looking at buying 40% of a property valued at 825,000.
    I am the only one putting a deposit down of 45,000 - my friend is putting down nothing as he has no real savings (except for fees etc). That means we will need a mortgage of 285,000.
    I want to make sure I am doing calculations correctly to agree on the Deed of Trust how much of the property I will own.
    I've worked out I will own 56.82% and he will own 43.18% which sounds like he will own a lot of the property for not putting down any capital?
    Is this correct or am I overthinking it? I want to work out potential profits as and when it does come to sell to see if it's financially viable.
    E.g. if the property was to rise to 900,00 in future, I worked out I would be entitled to 204,552 and he would be entitled to 155,448 with the above %s.
    Is there any other way the entitlement would be decided?
    Any help will be appreciated!
    Originally posted by soontobehousebuyer
    You do not use a fixed percentage in the DOT you need a 2 part formula. You need to start with the all inclusive price including fees stamp duty etc.
    Assume for the moment that is 330,00 and you are the only one putting in capital of 45,000 your DOT would say that you get 13.6% (45/330) of the sale price less disposal costs, then after the mortgage is paid off you split whats left 50/50.
    That assumes you are splitting the mortgage payments 50/50. If there is rent to pay on the 60% you don't own it would be a good idea to put in the DOT that this will also be split 50/50.
    Using this formula if you sell on day 2 your partner will get nothing but if you sell in say 25yrs time when the mortgage has been paid off by both of you, you will get 56.8% of the sale proceeds and your friend 43.2%.
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