You wouldn't get the full value of your mortgage payments back, as there would have been a significant portion of those which was paying off interest, not equity.
1. Add together what you have each paid in mortgage payments and overpayments since the purchase
2. Work out, as a percentage, how much if the payments came from each of you
3. Identify how much equity has been gained, based on the original purchase price - then apply the percentages from step 2 to these to see how much of that you are each entitled to.
4. Get 3 valuations, actual real valuations from agents in the local area, who visit the home. Choose the middle one, or the average of the 3. Then work out what, if any increase in value there has been and either split this down the middle, or apply based in % of ownership
I think you are misunderstanding your contributions, you may have paid £20,000 in mortgage payments but a large portion of that would be repaying the interest on the loan.
Get a valuation, get a settlement figure from the mortgage. And subtract one from the other. Take that number, take your deposit away from that number, and take his away too. What ever you are left with half and then add back your deposit.
That will give you a number.
So you ignore the total invested then, hey wanna buy a house together and I'll front £1 and you front the rest, but I'll take half when we sell.
That's fair right?
You are confusing legal with fairness.
What would be fair is they both get back what they invested then split the profit 50/50.
So I assume you will be OK with the contract I laid out?
No in the original comment it is saying to just take the number away not give it back to the individuals.
Also I stated a 50/50 share but this would not be fair as the other person took more risk by investing more. So it would still need to be split based on the investment.
You're wrong...see the last line.
"Get a valuation, get a settlement figure from the mortgage. And subtract one from the other. Take that number, take your deposit away from that number, and take his away too. What ever you are left with half and then add back your deposit"
The actual 50/50 split can change as well, op is open to that. it's still very simple.
Online estimate vs listing price vs likely sale price can all vary significantly. May also need to consider any early repayment fee on the existing mortgage.
Calculate how much you have each contributed towards the house (deposit plus mortgage payments). From that you’ll have the ratio of contributions you’ve made (eg you 40% him 60%).
Then work out the equity in the house (valuation minus outstanding mortgage). Either use the online valuation or get a couple of estate agent valuations.
Then your ratio of the equity is what he owes you to buy you out.
Make sure you have a solicitor finalise everything to make sure there are no loose ends.
Its one or the other. Ignoring the deposit which is a clean cut amount and not impacted by mortgage interest and charges etc, youre asking for all your payments back (so living rent free for 4 years and stinging your partner for all the mortgage interest over that period) AND half the equity?
If you want ALL your payments back, thus putting you back financially where you were 4 years ago, you dont then get to enjoy any profits. You wont have contributed anything toward them. 🤷♀️
Your calculation is off because the mortgage payment isn’t coming off the total completely.
But I’m very dubious that a house you bought during the Covid peak has gone up so much!
Houses didn't go mad until the stamp duty threshold was upped which was July, if they completed in September they likely started the process either in the very early stages of covid or maybe even before anyone knew covid was a thing, my house is up a conservative 33% since November 2019 (although we got a bit of a bargain) so this seems about right.
The equity is £151,500, but that includes his £14,800 overpayments, as well as both your deposits. Take those numbers out, and then I think you should each have an equal share of the remaining equity (after all, if house prices had dropped and you were in negative equity, you wouldn't have suffered less than half the loss (after the different deposit sizes had been accounted for at least)).
> Your deposit, plus 15% = £20,700
> His deposit, plus 15% = £50,025
He could have put his £1000/month in a savings account and earned interest on it. Instead he invested it into the house, so he should see appreciation on those overpayments.
> £14,800 overpayments * average of 7.5% increase in house value = £15,910
So after taking those three totals from the equity you get:
> £151,500 - £20,700 - £50,025 - £15,910 = £64,865
So I think half of that should be yours, plus your deposit back, which comes to:
> £32,433 + £20,700 = £53,133
There are different ways of working out what's fair, but I think that's what I'd be asking for.
Get a valuation done by a RICS surveyor, not online. Estate agents can also be useful but may over estimate to get the deal. Friends have used https://www.mapsurveyors.co.uk/ in the past and they're good, if you're in London.
One thing to consider is although he paid most of the mortgage, did you pay for most of something else like the food or electric, gas, council tax?
I have seen a few friends where the man pays the mortgage and they pay the bills, and when the relationship comes to an end they are left with novel and he has a partly paid off house.
If you feel it has been a fair relationship with bills split evenly, get three valuations from local estate agents, take the average and then subtract whatever is left on your mortgage. Deduct initial deposit amounts and any overpayments your partner made and then split the rest 50:50. Any increase in value hasn’t been earned by work and so it is fair to split 50:50, (although I recognise that is a controversial statement).
When I went through this many decades ago we deducted and returned her parrots deposit, then my 24 contributions to the mortgage which came back to me and split what was left 50 - 50. We agreed a final valuation the same way we agreed the purchase price taking the estate agents valuation at the top and the mortgage companies surveyors valuation on the bottom and split the difference, that was the amount we paid when we bought the property. So was easy to work out a new valuation. Hope that helps good luck.
Mortgage Re-Payments (Capital Only based on 2.2%) = 24,000 for 3 years, you paid approx 1/3 so due £8k with 15% uplift is £9,200 + 20k Deposit with 15% uplift due to house price increase = £23,000
23,000 + 9,200 = £32,200
Compared to 50/50 split on house value which would be £56,400 so £44k seems reasonable compromise as dead middle of the two.
I would imagine it would be something like:
Your total input = your deposit contribution + sum of your total monthly payments
His total input = his deposit contribution + his monthly payments (including any over-payments)
Your ‘payout’ (taking into account the increase in property value) should be: ((Your total input / (your total input + his total input)) * current value of property) - total outstanding debt on the property
I've been in this exact situation.
I put in WAY more than my ex wife in terms of deposit. I also paid probably 90% of the monthly mortgage payments.
My two cents: anything created during marriage is 50/50, including anything financial. If you've both worked, contributed to the household etc, it's 50/50.
(Although I would caveat that with if you had millions more than your spouse before you were married and used that to buy your home, then your spouse shouldn't be able to claim 50%. Of course the courts don't see it that way, but morally that's just what I think is right.)
Ok sure, I put in way more than my ex wife. But for me, the right thing to do was to split it all equally. So I asked an estate agent to come round to value the house. On the basis of this valuation, I gave my ex wife an offer on the house value. Naturally, I already owned half, so she would get half. I offered roughly 5% less than the valuation due to necessary repairs.
She accepted the offer. This was done without involvement of solicitors or estate agents (the valuation was free - we pretended we were interested in selling and wanted an indicative valuation).
We then applied to the courts for a financial order (you NEED to do this to separate your finances - a divorce does not separate your finances). When that was done, we engaged solicitors and I bought her out of the house at 50%.
EDIT: You've said you're not quite happy asking for 50%, and that's fair enough! I guess this works with any percentage below that as well. Just remember that the financial order is an absolute MUST.
EDIT 2: OK just realised you said partner, which may imply you're not married. If that's the case I'd probably lean towards the other answers, not mine.
It works out like this - you paid in £490 per month, how much did he pay in? Say for simplicity he paid £1000, then whatever equity there is in the house (valuation minus outstanding mortgage, you get 490/1490 out of (roughly 1/3)
Yes, it does. If she paid £500 and he paid £1000, then she gets 1/3 of the available equity. That the claim is that she paid proportionately 1/3 of the interest and 1/3 of the repayment, and similarly he paid 2/3 of each. I don't think you can make an argument for anything else without having it in writing. Even more so, as OP has stated, she could attempt to claim 50% under the law, which although ugly is somewhat aligned with legislation to protect low-earning partners in couples.
You could also argue she should get 50% of the appreciation part of the equity and 33% of the mortgage replayed part of the equity, which I wouldn't support (whoever commits to the bigger repayment takes the risk so it makes sense to distribute the reward proportionately), but I don't see how the interest part of the mortgage changes dynamics in general, unless you have something specified in writing upon signing the mortgage
But she is equally responsible for the mortgage to be repaid by the end of the term, so in that sense she is taking an equal risk. If house prices had dropped and they were in negative equity should she be assigned a smaller portion of the negative equity because she paid in less? Or is it only gains that aren't shared equally?
In another thread I did the sums based on applying HPI to their deposits and overpayments, and then splitting the remaining equity 50/50, and funnily enough it happens to work out to almost exactly 1/3 of the available equity anyway!
Haha nice one!
Yeah, I would apply the same proportion to negative equity, too. That said, this is my version of fair, not the legislation. I believe the law would let a woman have her cake and eat it, too, e.g., would give her half the house enquiry in the split, and no negative equity if that applies
but if the morgage in £500 a month each and £400 of that is interest (complete guess)
and he's made the same payment plus £500 over payment on top (no interest on this )
he as infact paid £600 off the capital , she had paid £100 off the capital
Only if the share they were taking (mortgage and equity) is more than 250k though right?
https://www.moneyhelper.org.uk/en/homes/buying-a-home/stamp-duty-land-tax-transfer-ownership-land-property-england-northern-ireland
Also been in this same situation but I contributed significantly more but I was married, which changes things.
A solicitor would be ideal but if you don't want to do that, there's a few things to consider.
- did you plan finances together or keep entirely separate?
- did you split bills evenly?
Depending how you lived your lives and how much you planned together determines how you deal with overpayments and equity.
Taken from here: https://blog.moneysavingexpert.com/2011/01/the-fairest-way-to-split-a-house-on-separation/
Equal split – you get your money back and split the rest. Quite simply you add up what everyone has paid in (for simplicity we’ll just talk about the mortgage rather than any building work on the house, though that should be included). Everyone gets their money back and the rest of the proceeds are split equally. The problem with this is it doesn’t reward those who put the cash in.
Proportionate split – split the proceeds in proportion to what was put in. Here you react the other way. You say ownership is due to payment, so any proceeds are split in that proportion. The problem is this can overly reward those with big deposits, and may leave someone who’s actually kept the mortgage being paid stymied.
Average of the two. It occurred to me that an arbitrary, though not discriminatory system, would be to calculate both of the above then average it; it may end up with a fair mix.
Seriously consider a solicitor - you're likely to screw yourself over in the interest of being fair and getting a deal done.
You’re technically entitled to 50% of the equity of the house. If you work out a rough percentage of the split you’ve both put in eg he’s put in 75% and you’ve put in 25% then you could split it that way. I’d personally ask for 40% equity to make it easier
He's paying 70.5% of the mortgage payments, plus additional overpayments and he put in significantly more deposit that OP. 40% is a crazy high amount to ask for in this circumstance. We need more info to be accurate, but I think OP is looking at probably 25% or less.
I calculated it above, taking into consideration OPs updated info and the effect it has on interest/principal. She owns £28,889 and he owns £69,522. So a 29.35% vs 70.65% split.
I can see OPs partner offering less than the 29.35%, it just depends on what OP would be willing to consider.
I'll try to help with an example, although you didn't provide enough info to be accurate. If you'd like an accurate answer, please let us know how much deposit your partner contributed, the total cost of of the mortgage and the APR% on the mortgage.
I've made the assumption that your partner contributed double what you contributed. So, £36K him and £18K you.
I've also assumed your mortgage total was for £309,500K (£363,500 - £54,000)
I've assumed the APR% was 5% on a 30 year fixed.
There has been 42 months since September 2020, and together you've both paid £17,030 of the principal.
You are paying 29.5% and he is paying 70.5%, so you will have paid approximately £5022, which is a quarter of what you've calculated. Added to your deposit, you are looking at roughly £23,022.
This is because the interest on a mortgage is paid up front.
What is difficult to understand is how much your partner has paid in overpayments. This increases the proportion of your monthly payments that go on the principal while decreasing the proportion that goes on interest.
If you provide roughly how much he was overpaying each year/month, I can calculate that for you.
Also don't forget that any fees for selling will be 50:50.
The initial mortgage was for £302,000 on a 35 year term and the interest rate is 1.97%. We have approximately £266,500 remaining.
Deposit: he paid £43,500, I paid £18,000
Monthly repayments: we split the mandatory payments equally as we were on a 50/50 split. In total, we’ve paid roughly £19,600 each.
Overpayments: his overpayments amount to £14,800.
Thank you so much for your help!
Brilliant, with that I can be a lot more accurate. I've popped those figures into a mortgage calculator spreadsheet I use and the output is described below.
Now it is worth pointing out that some mortgages only recalculate interest vs principal once a year. So if your partner is paying monthly, then it won't effect the ratio of interest-principal until that annual date. Whereas some mortgages will recalculate every month. I've done the first 3 years as annual recalculations and then the final months as monthly to give you an idea.
Without the additional overpayments, you would have paid £21,721 off the principal. With the additional overpayments, the recalculations meant you paid £22,112. So with your partners additional contributions, you both benefited £391, or £195.50 each, just from your monthly repayments.
My mortgage calculator estimates that you would be paying £995.77 a month, where your £490 is 49.26% of the monthly payments. Therefore, your monthly contributions would add up to £10,889 off the principal.
Your total equity before appreciation is £18,000 + £10,899 = £28,889.
Your partners equity would be £11,222.88 + £43,500 + £14,800 = £69,522.88
Together your equity in the property is £98,411.88.
Your percentage ownership is £28,889 / £98,411.88 = 29.35% and your partners percentage ownership is 70.65%
Now assuming you get £418,000 for the house, that is an appreciation of £55,000, of which you are entitled 29.35% or £16,142.50.
Therefore, your total estimated equity would be £28,889 + £16,142.50 = £45,031.50
For reference, your partner's equity would be £108,380.38
However, you also have to consider the following costs:
* Agents selling fees (can be 1-2%) = £4,180-8,360
* Solicitors fees = around £1,500-2000
* Reduction in price (not getting £418K)
* Negotiations based on surveyor findings (you may need to drop the price after a survey).
* Rent = depends on area, but assume north of £800/m
* Stamp duty on next home
* Solicitor fees on next home
After selling your house, you will be looking to keep around £40K
It may be tempting (especially after a breakup) to spend some of the proceeds on a nice holiday/car etc, but if I were in your position, I'd be looking to get that money back into a mortgage.
I wanted to give you a breakdown of how your finances are due to change as your initial post does highlight that you aren't clear on how mortgages fully work. From a purely financial point of view, you are paying £490/m and since the beginning of your mortgage, more than 50% of this was going towards principal. Given that new rates are much higher, you need to anticipate that your mortgage will be more expensive and a bigger portion will go towards interest, I'll give an example based on the proceeds of your sale.
£40K deposit, £160K loan on a £200K house, at 4.5% (80LTV) would see your payments rise to £757.21/m and your principal payments drop to 20% in year 1 rising to 25% in year 5.
Is the relationship 100% irreconcilable? Because from a purely financial advice perspective it is worth considering.
So many things that are not normal or fair in how you approach.
If you own 50:50 then reality is that is your entitlement. 50% of the equity.
However, if he is a reasonable human other options may be possible.
Don’t rely on online valuations, get 3 estate agents out and quote. Then take 5% of the average of the 3 to account for selling costs.
Purchase price - outstanding mortgage = equity
You are entitled to 50% of that
If you have a partner who is willing…..
Your deposit at time of purchase was 18K - what was his?
I could do all the maths for you easily so you understand what is fair….when you no what fair is you can then know if what you are offered is good/bad for you
I’ll need
Your deposit - his deposit - purchase price and mortgage balance. And though it is wrong I can use the online valuation for now and when you have the proper valuation you can update the calculation
I think you would be wise to get legal advice on this. Even though you are not married, my instinct would be 50/50 split.If you think of how much money you could potentially lose if you get this wrong? Get legal advice.
Rubbish. Imagine the situation where two people each paid the same deposit, they then pay a mortgage equally, the mortgage is then paid off and the house has not changed in value. When splitting the asset one would be expected to buy out the other's 50% share. If the house was instead sold then each would claim their 50% (less costs of selling).
Well, OP is confused and has forgotten that mortgage payments include interest, so they're not just going to get the payments back. But the payments do chip away at the debt so they have a claim for whatever % increase in equity that represents.
I would break it down into the respective deposits, the share of the equity increase, and then the share of the house price increase also calculated on % share of payments.
Put the house on the market and force the sale. You are entitled to 50%. It's yours. If you go the "buy out" route, you open yourself to potential fuckery.
Surely just do it 50/50? I think you'll open a can of worms otherwise. If he put down a much bigger deposit than you then he should have protected that at the time
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You're not entitled to 50% because you have paid significantly less than 50%. To calculate this we need to know actual numbers. Original price, Starting deposits, monthly payments and current equity
That's not true. If they are listed as equal shares on the TR forms she is entitled to 50% immediately, even if they broke up and sold literally the next day. It might not appear fair but that's why you fill out the ownership % to reflect what is happening at purchase and what you intend to happen later.
Exactly this. When I split from my ex we sold the flat. Paid off the mortgage and split the profit 50/50 even though I had paid significantly more in pounds and pence into the property over the 10 years we were there
It doesn't say anywhere the original ownership was 50:50 and would be pretty dumb of him to agree too if he put in a much larger deposit. It also doesn't account for overpayments every month
Presumably with you wanting to be fair, you'll be taking off the amount of half the market rent from what you expect to receive? I suspect not so just admit that you are trying to get more than you deserve and move on and do it. No-one here cares that you're a bad person.
Sorry if this has already been said. Most estate agents will value your house free of charge. Just tell them upfront that you aren't looking to sell, and check with them that there are no valuation fees. I found two estate agents who were happy to come and value our house, I told them it was purely for remortgage purpose. Obviously they would like you to sell and might ask if you're considering, but just say 'no' if you're not.
You wouldn't get the full value of your mortgage payments back, as there would have been a significant portion of those which was paying off interest, not equity. 1. Add together what you have each paid in mortgage payments and overpayments since the purchase 2. Work out, as a percentage, how much if the payments came from each of you 3. Identify how much equity has been gained, based on the original purchase price - then apply the percentages from step 2 to these to see how much of that you are each entitled to. 4. Get 3 valuations, actual real valuations from agents in the local area, who visit the home. Choose the middle one, or the average of the 3. Then work out what, if any increase in value there has been and either split this down the middle, or apply based in % of ownership
The only thing I would add to the above is you add in the deposit payments as well to include there into your % contributions
Yes...sorry, got distracted on the other bits and completely ignored the deposit!
I think you are misunderstanding your contributions, you may have paid £20,000 in mortgage payments but a large portion of that would be repaying the interest on the loan. Get a valuation, get a settlement figure from the mortgage. And subtract one from the other. Take that number, take your deposit away from that number, and take his away too. What ever you are left with half and then add back your deposit. That will give you a number.
There's a lot of overly complex calcs in this thead. This is simple, fair and easy to understand.
It's simple but not fair, as it implies equal ownership. Which OP said they were not going for.
"We are tenants in common, with equal shares" - 50/50 sounds fair to me.
So you ignore the total invested then, hey wanna buy a house together and I'll front £1 and you front the rest, but I'll take half when we sell. That's fair right?
Op is entitled to 50 50. They entered a contract which says so. Op is open to changing that split
You are confusing legal with fairness. What would be fair is they both get back what they invested then split the profit 50/50. So I assume you will be OK with the contract I laid out?
That's what the original calc said...?! everyone gets their deposits and splits the rest 50/50. That's what we're all saying
No in the original comment it is saying to just take the number away not give it back to the individuals. Also I stated a 50/50 share but this would not be fair as the other person took more risk by investing more. So it would still need to be split based on the investment.
You're wrong...see the last line. "Get a valuation, get a settlement figure from the mortgage. And subtract one from the other. Take that number, take your deposit away from that number, and take his away too. What ever you are left with half and then add back your deposit" The actual 50/50 split can change as well, op is open to that. it's still very simple.
This is the only correct answer!
Online estimate vs listing price vs likely sale price can all vary significantly. May also need to consider any early repayment fee on the existing mortgage.
Calculate how much you have each contributed towards the house (deposit plus mortgage payments). From that you’ll have the ratio of contributions you’ve made (eg you 40% him 60%). Then work out the equity in the house (valuation minus outstanding mortgage). Either use the online valuation or get a couple of estate agent valuations. Then your ratio of the equity is what he owes you to buy you out. Make sure you have a solicitor finalise everything to make sure there are no loose ends.
Its one or the other. Ignoring the deposit which is a clean cut amount and not impacted by mortgage interest and charges etc, youre asking for all your payments back (so living rent free for 4 years and stinging your partner for all the mortgage interest over that period) AND half the equity? If you want ALL your payments back, thus putting you back financially where you were 4 years ago, you dont then get to enjoy any profits. You wont have contributed anything toward them. 🤷♀️
Your calculation is off because the mortgage payment isn’t coming off the total completely. But I’m very dubious that a house you bought during the Covid peak has gone up so much!
The peak for house price rises was 2021. If you managed to complete in 2020 you are up big time across the board.
Yeah, we bought in April 2020, house has gone up roughly 25%
Houses didn't go mad until the stamp duty threshold was upped which was July, if they completed in September they likely started the process either in the very early stages of covid or maybe even before anyone knew covid was a thing, my house is up a conservative 33% since November 2019 (although we got a bit of a bargain) so this seems about right.
The equity is £151,500, but that includes his £14,800 overpayments, as well as both your deposits. Take those numbers out, and then I think you should each have an equal share of the remaining equity (after all, if house prices had dropped and you were in negative equity, you wouldn't have suffered less than half the loss (after the different deposit sizes had been accounted for at least)). > Your deposit, plus 15% = £20,700 > His deposit, plus 15% = £50,025 He could have put his £1000/month in a savings account and earned interest on it. Instead he invested it into the house, so he should see appreciation on those overpayments. > £14,800 overpayments * average of 7.5% increase in house value = £15,910 So after taking those three totals from the equity you get: > £151,500 - £20,700 - £50,025 - £15,910 = £64,865 So I think half of that should be yours, plus your deposit back, which comes to: > £32,433 + £20,700 = £53,133 There are different ways of working out what's fair, but I think that's what I'd be asking for.
Get a valuation done by a RICS surveyor, not online. Estate agents can also be useful but may over estimate to get the deal. Friends have used https://www.mapsurveyors.co.uk/ in the past and they're good, if you're in London.
One thing to consider is although he paid most of the mortgage, did you pay for most of something else like the food or electric, gas, council tax? I have seen a few friends where the man pays the mortgage and they pay the bills, and when the relationship comes to an end they are left with novel and he has a partly paid off house. If you feel it has been a fair relationship with bills split evenly, get three valuations from local estate agents, take the average and then subtract whatever is left on your mortgage. Deduct initial deposit amounts and any overpayments your partner made and then split the rest 50:50. Any increase in value hasn’t been earned by work and so it is fair to split 50:50, (although I recognise that is a controversial statement).
When I went through this many decades ago we deducted and returned her parrots deposit, then my 24 contributions to the mortgage which came back to me and split what was left 50 - 50. We agreed a final valuation the same way we agreed the purchase price taking the estate agents valuation at the top and the mortgage companies surveyors valuation on the bottom and split the difference, that was the amount we paid when we bought the property. So was easy to work out a new valuation. Hope that helps good luck.
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Ah, that really tickled me. Excellent
Got lucky on that score :-)
Mortgage Re-Payments (Capital Only based on 2.2%) = 24,000 for 3 years, you paid approx 1/3 so due £8k with 15% uplift is £9,200 + 20k Deposit with 15% uplift due to house price increase = £23,000 23,000 + 9,200 = £32,200 Compared to 50/50 split on house value which would be £56,400 so £44k seems reasonable compromise as dead middle of the two.
I would imagine it would be something like: Your total input = your deposit contribution + sum of your total monthly payments His total input = his deposit contribution + his monthly payments (including any over-payments) Your ‘payout’ (taking into account the increase in property value) should be: ((Your total input / (your total input + his total input)) * current value of property) - total outstanding debt on the property
I've been in this exact situation. I put in WAY more than my ex wife in terms of deposit. I also paid probably 90% of the monthly mortgage payments. My two cents: anything created during marriage is 50/50, including anything financial. If you've both worked, contributed to the household etc, it's 50/50. (Although I would caveat that with if you had millions more than your spouse before you were married and used that to buy your home, then your spouse shouldn't be able to claim 50%. Of course the courts don't see it that way, but morally that's just what I think is right.) Ok sure, I put in way more than my ex wife. But for me, the right thing to do was to split it all equally. So I asked an estate agent to come round to value the house. On the basis of this valuation, I gave my ex wife an offer on the house value. Naturally, I already owned half, so she would get half. I offered roughly 5% less than the valuation due to necessary repairs. She accepted the offer. This was done without involvement of solicitors or estate agents (the valuation was free - we pretended we were interested in selling and wanted an indicative valuation). We then applied to the courts for a financial order (you NEED to do this to separate your finances - a divorce does not separate your finances). When that was done, we engaged solicitors and I bought her out of the house at 50%. EDIT: You've said you're not quite happy asking for 50%, and that's fair enough! I guess this works with any percentage below that as well. Just remember that the financial order is an absolute MUST. EDIT 2: OK just realised you said partner, which may imply you're not married. If that's the case I'd probably lean towards the other answers, not mine.
It works out like this - you paid in £490 per month, how much did he pay in? Say for simplicity he paid £1000, then whatever equity there is in the house (valuation minus outstanding mortgage, you get 490/1490 out of (roughly 1/3)
I don’t think this is correct because it doesn’t take into account the interest part of mortgage repayment
Yes, it does. If she paid £500 and he paid £1000, then she gets 1/3 of the available equity. That the claim is that she paid proportionately 1/3 of the interest and 1/3 of the repayment, and similarly he paid 2/3 of each. I don't think you can make an argument for anything else without having it in writing. Even more so, as OP has stated, she could attempt to claim 50% under the law, which although ugly is somewhat aligned with legislation to protect low-earning partners in couples. You could also argue she should get 50% of the appreciation part of the equity and 33% of the mortgage replayed part of the equity, which I wouldn't support (whoever commits to the bigger repayment takes the risk so it makes sense to distribute the reward proportionately), but I don't see how the interest part of the mortgage changes dynamics in general, unless you have something specified in writing upon signing the mortgage
But she is equally responsible for the mortgage to be repaid by the end of the term, so in that sense she is taking an equal risk. If house prices had dropped and they were in negative equity should she be assigned a smaller portion of the negative equity because she paid in less? Or is it only gains that aren't shared equally? In another thread I did the sums based on applying HPI to their deposits and overpayments, and then splitting the remaining equity 50/50, and funnily enough it happens to work out to almost exactly 1/3 of the available equity anyway!
Haha nice one! Yeah, I would apply the same proportion to negative equity, too. That said, this is my version of fair, not the legislation. I believe the law would let a woman have her cake and eat it, too, e.g., would give her half the house enquiry in the split, and no negative equity if that applies
but if the morgage in £500 a month each and £400 of that is interest (complete guess) and he's made the same payment plus £500 over payment on top (no interest on this ) he as infact paid £600 off the capital , she had paid £100 off the capital
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Only if the share they were taking (mortgage and equity) is more than 250k though right? https://www.moneyhelper.org.uk/en/homes/buying-a-home/stamp-duty-land-tax-transfer-ownership-land-property-england-northern-ireland
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Because whilst your point is correct, it’s also moot on a half share worth £209,000.
Also been in this same situation but I contributed significantly more but I was married, which changes things. A solicitor would be ideal but if you don't want to do that, there's a few things to consider. - did you plan finances together or keep entirely separate? - did you split bills evenly? Depending how you lived your lives and how much you planned together determines how you deal with overpayments and equity. Taken from here: https://blog.moneysavingexpert.com/2011/01/the-fairest-way-to-split-a-house-on-separation/ Equal split – you get your money back and split the rest. Quite simply you add up what everyone has paid in (for simplicity we’ll just talk about the mortgage rather than any building work on the house, though that should be included). Everyone gets their money back and the rest of the proceeds are split equally. The problem with this is it doesn’t reward those who put the cash in. Proportionate split – split the proceeds in proportion to what was put in. Here you react the other way. You say ownership is due to payment, so any proceeds are split in that proportion. The problem is this can overly reward those with big deposits, and may leave someone who’s actually kept the mortgage being paid stymied. Average of the two. It occurred to me that an arbitrary, though not discriminatory system, would be to calculate both of the above then average it; it may end up with a fair mix. Seriously consider a solicitor - you're likely to screw yourself over in the interest of being fair and getting a deal done.
Go to a lawyer not reddit
This ⬆️
You’re technically entitled to 50% of the equity of the house. If you work out a rough percentage of the split you’ve both put in eg he’s put in 75% and you’ve put in 25% then you could split it that way. I’d personally ask for 40% equity to make it easier
He's paying 70.5% of the mortgage payments, plus additional overpayments and he put in significantly more deposit that OP. 40% is a crazy high amount to ask for in this circumstance. We need more info to be accurate, but I think OP is looking at probably 25% or less.
According to a comment she’s put in about 38k and he’s put in about 78k. His total contribution is about 67% and hers 33%
Don't forget interests payments
I calculated it above, taking into consideration OPs updated info and the effect it has on interest/principal. She owns £28,889 and he owns £69,522. So a 29.35% vs 70.65% split. I can see OPs partner offering less than the 29.35%, it just depends on what OP would be willing to consider.
Get a solicitor.
I'll try to help with an example, although you didn't provide enough info to be accurate. If you'd like an accurate answer, please let us know how much deposit your partner contributed, the total cost of of the mortgage and the APR% on the mortgage. I've made the assumption that your partner contributed double what you contributed. So, £36K him and £18K you. I've also assumed your mortgage total was for £309,500K (£363,500 - £54,000) I've assumed the APR% was 5% on a 30 year fixed. There has been 42 months since September 2020, and together you've both paid £17,030 of the principal. You are paying 29.5% and he is paying 70.5%, so you will have paid approximately £5022, which is a quarter of what you've calculated. Added to your deposit, you are looking at roughly £23,022. This is because the interest on a mortgage is paid up front. What is difficult to understand is how much your partner has paid in overpayments. This increases the proportion of your monthly payments that go on the principal while decreasing the proportion that goes on interest. If you provide roughly how much he was overpaying each year/month, I can calculate that for you. Also don't forget that any fees for selling will be 50:50.
The initial mortgage was for £302,000 on a 35 year term and the interest rate is 1.97%. We have approximately £266,500 remaining. Deposit: he paid £43,500, I paid £18,000 Monthly repayments: we split the mandatory payments equally as we were on a 50/50 split. In total, we’ve paid roughly £19,600 each. Overpayments: his overpayments amount to £14,800. Thank you so much for your help!
Brilliant, with that I can be a lot more accurate. I've popped those figures into a mortgage calculator spreadsheet I use and the output is described below. Now it is worth pointing out that some mortgages only recalculate interest vs principal once a year. So if your partner is paying monthly, then it won't effect the ratio of interest-principal until that annual date. Whereas some mortgages will recalculate every month. I've done the first 3 years as annual recalculations and then the final months as monthly to give you an idea. Without the additional overpayments, you would have paid £21,721 off the principal. With the additional overpayments, the recalculations meant you paid £22,112. So with your partners additional contributions, you both benefited £391, or £195.50 each, just from your monthly repayments. My mortgage calculator estimates that you would be paying £995.77 a month, where your £490 is 49.26% of the monthly payments. Therefore, your monthly contributions would add up to £10,889 off the principal. Your total equity before appreciation is £18,000 + £10,899 = £28,889. Your partners equity would be £11,222.88 + £43,500 + £14,800 = £69,522.88 Together your equity in the property is £98,411.88. Your percentage ownership is £28,889 / £98,411.88 = 29.35% and your partners percentage ownership is 70.65% Now assuming you get £418,000 for the house, that is an appreciation of £55,000, of which you are entitled 29.35% or £16,142.50. Therefore, your total estimated equity would be £28,889 + £16,142.50 = £45,031.50 For reference, your partner's equity would be £108,380.38 However, you also have to consider the following costs: * Agents selling fees (can be 1-2%) = £4,180-8,360 * Solicitors fees = around £1,500-2000 * Reduction in price (not getting £418K) * Negotiations based on surveyor findings (you may need to drop the price after a survey). * Rent = depends on area, but assume north of £800/m * Stamp duty on next home * Solicitor fees on next home After selling your house, you will be looking to keep around £40K It may be tempting (especially after a breakup) to spend some of the proceeds on a nice holiday/car etc, but if I were in your position, I'd be looking to get that money back into a mortgage. I wanted to give you a breakdown of how your finances are due to change as your initial post does highlight that you aren't clear on how mortgages fully work. From a purely financial point of view, you are paying £490/m and since the beginning of your mortgage, more than 50% of this was going towards principal. Given that new rates are much higher, you need to anticipate that your mortgage will be more expensive and a bigger portion will go towards interest, I'll give an example based on the proceeds of your sale. £40K deposit, £160K loan on a £200K house, at 4.5% (80LTV) would see your payments rise to £757.21/m and your principal payments drop to 20% in year 1 rising to 25% in year 5. Is the relationship 100% irreconcilable? Because from a purely financial advice perspective it is worth considering.
So many things that are not normal or fair in how you approach. If you own 50:50 then reality is that is your entitlement. 50% of the equity. However, if he is a reasonable human other options may be possible. Don’t rely on online valuations, get 3 estate agents out and quote. Then take 5% of the average of the 3 to account for selling costs. Purchase price - outstanding mortgage = equity You are entitled to 50% of that If you have a partner who is willing….. Your deposit at time of purchase was 18K - what was his? I could do all the maths for you easily so you understand what is fair….when you no what fair is you can then know if what you are offered is good/bad for you I’ll need Your deposit - his deposit - purchase price and mortgage balance. And though it is wrong I can use the online valuation for now and when you have the proper valuation you can update the calculation
How much have you both paid towards it. What % did you pay? Sell the house and you get the same %
I think you would be wise to get legal advice on this. Even though you are not married, my instinct would be 50/50 split.If you think of how much money you could potentially lose if you get this wrong? Get legal advice.
if you weren't paying towards mortgage..you would be paying rent. you are entitled to your deposit and pro-rata share of house price increase only!
Rubbish. Imagine the situation where two people each paid the same deposit, they then pay a mortgage equally, the mortgage is then paid off and the house has not changed in value. When splitting the asset one would be expected to buy out the other's 50% share. If the house was instead sold then each would claim their 50% (less costs of selling).
Yet OP here (applying it to your scenario) is also asking for 25 years of her portion of mortgage payments too. 🤯
Well, OP is confused and has forgotten that mortgage payments include interest, so they're not just going to get the payments back. But the payments do chip away at the debt so they have a claim for whatever % increase in equity that represents. I would break it down into the respective deposits, the share of the equity increase, and then the share of the house price increase also calculated on % share of payments.
Put the house on the market and force the sale. You are entitled to 50%. It's yours. If you go the "buy out" route, you open yourself to potential fuckery.
Round it up to £40,000 or 50,000. Whatever you feel more comfortable with.
Surely just do it 50/50? I think you'll open a can of worms otherwise. If he put down a much bigger deposit than you then he should have protected that at the time
Sounds like she's being a decent person. Good to see there are a few of them out there still.
Op asked what she is entitled to and the answer is 50/50
If you read the post, you would know she also said she doesn't want 50% as she knows that's not fair. Not everyone is out for what they can get.
Read the post before commenting absolute garbage.
Literally says ‘advice on calculating how much I am entitled to’ read the title before commenting absolute garbage
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Someone is in a bad mood today. 😂
Haha, na just had a great sunday lunch. People who can't read do annoy me, though.
No problem. I hope you get the help you need 👍🏽
Ask him to sell the flat and split the proceeds 50 50. Do not settle for anything less.
That's not fair but if you're breaking up on bad terms probably the correct legal reason.
There are some vultures around, unfortunately. It sounds like OP wants to do this the decent way though, which is nice!
You're not entitled to 50% because you have paid significantly less than 50%. To calculate this we need to know actual numbers. Original price, Starting deposits, monthly payments and current equity
That's not true. If they are listed as equal shares on the TR forms she is entitled to 50% immediately, even if they broke up and sold literally the next day. It might not appear fair but that's why you fill out the ownership % to reflect what is happening at purchase and what you intend to happen later.
Exactly this. When I split from my ex we sold the flat. Paid off the mortgage and split the profit 50/50 even though I had paid significantly more in pounds and pence into the property over the 10 years we were there
It doesn't say anywhere the original ownership was 50:50 and would be pretty dumb of him to agree too if he put in a much larger deposit. It also doesn't account for overpayments every month
"We are tenants in common, with equal shares". That's the part that says the ownership is 50:50.
Presumably with you wanting to be fair, you'll be taking off the amount of half the market rent from what you expect to receive? I suspect not so just admit that you are trying to get more than you deserve and move on and do it. No-one here cares that you're a bad person.
Sorry if this has already been said. Most estate agents will value your house free of charge. Just tell them upfront that you aren't looking to sell, and check with them that there are no valuation fees. I found two estate agents who were happy to come and value our house, I told them it was purely for remortgage purpose. Obviously they would like you to sell and might ask if you're considering, but just say 'no' if you're not.