Hi all, Not being a boffin at maths or finance I was wondering how a house profit should be divined if only one person has put up the deposit? 5 years ago when we bought a house my partner put up the 10% deposit since then the value of the house has increased. We have both paid equal amounts off the mortgage.
Many thanks Sam
I dont suppose there's any hard and fast rule... I would: work out the percentage increase inthe value of the house (once its sold) Pay the deposit back plus this percentage split the rest. Seems easy, and reasonable.
Let me see if I have this right. The house cost 140400 the added deposit took it to 156000 it is now worth 185,000 this would represent about a 20% increase. This would have to be applied to the original deposit so that is now worth about 18000. So would this come out of the total profit or should it be proportioned in some way?
Thanks again.
i would argue that the profit should be split in proportion to the captial amounts you have each paid. That would be partly the deposit and partly the captial repayments of the loan.
Alternatively you could include the interest and divide the profit in proiportion to the total amounts you have each paid.
but, if one of you has been earning and the other has been 'keeping house' then maybe it would be fairer to repay the deposit and then split the rest equally.
Ask youself what you would expect to happen if the house were in negative equity - how would yo uexpect to share the debt?
Robert
You mean you borrowed 140.4k, the house actually cost 156k, of which your partner put up 10%.
Yes, essentially the invested deposit is thought of as growing at the same rate as the value of the house, and therefore now, as then, should be worth 10% of the house, i.e. 18.5k.
You will have 140.4k of loan to repay out of the proceeds (minus whatever has been paid off if it wasn't an interest only loan). So if you get 185k, then after the loan is paid, there will be around 44k of profit (minus expenses). Of this, your partner who put up the deposit should get 18.5k back, which represents the "now" value of the 15.6k invested earlier. Of the remaining
24k or so, you should each get half. In other words, you get £12k, your partner gets £30.5k.
Yes - I would agree with this. Easy to work out, and is a fairly honest way to look at splitting things. Should avoid any disagreements.
In message , Sam writes
Partner and equal shares of the mortgage ..... assuming you are both owners, (on the deeds), and unless you have fallen out and are separating, 50/50 seems appropriate.
All fine and dandy if you can agree that. What is the legal position on this if the partnership splits (its not clear whether this is the case from the OP and I'm assuming they are not married), and the deposit-less partner thinks differently - for example they expect 50% of all profit or possibly 50% of the property including deposit? Again not sure if this is an issue to the OP or which part of the UK - if that has any relevance.
Pete
Except for the deposit, everything else was shared equally.
One way would be 10% of sale price to whoever paid the deposit, and split the remainder after redemption of mortgage equally.
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