PLEASE READ BEFORE POSTING
Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.Tenants in common - Shared ownership
Options
soontobehousebuyer
Posts: 1 Newbie
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!
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!
0
Comments
-
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.Mortgage started 2020, aiming to clear it in 2026.0 -
soontobehousebuyer wrote: »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.
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.0 -
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.soontobehousebuyer wrote: »
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!
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%.0
This discussion has been closed.
Categories
- All Categories
- 343.3K Banking & Borrowing
- 250.1K Reduce Debt & Boost Income
- 449.7K Spending & Discounts
- 235.3K Work, Benefits & Business
- 608.1K Mortgages, Homes & Bills
- 173.1K Life & Family
- 248K Travel & Transport
- 1.5M Hobbies & Leisure
- 15.9K Discuss & Feedback
- 15.1K Coronavirus Support Boards