House ownership - Changing share allocation at a later date

[413x]

We are drawing up our contributions for our ownership of the house as we have greatly differing deposit amounts

what we have at the minute is say 90:10 deposit
my gf will pay more than 10% of the mortgage and thus after the fix term be 80:20

we hope over pay, we might get promotions etc,
if we say 80:20 in the legal forms how easy (and costly!) is this to change?

say my gf won 10k on the lottery and the ownership went 70:30.

cant see any conclusive info on this, but must happen a lot!

 

[muon]

I don't think this is how equity works.

It isn't how much of the mortgage you pay but the value of the property at the time.

Say for example the house doubles in price, your GF only has to pay half the value of that 10% equity, the way you describe it. You are basically giving her a very valuable option which remember she doesn't have to take up if the house price goes down.

Ignoring the simple economics which I can easily understand, I'm no lawyer, but I doubt if you split it's as simple as how much you paid (mortgage or equity).

 

[b0rn2sk8]

Talk to your solicitor, together. They will explain the options to you.

 

[blueboy2001]

Your best bet is probably to have your solicitor draft an agreement that upon the sale of the property you both get your deposit amounts back first, then the remaining equity is spilt based on your ownership percentage.

Changing your ownership percentages will require a transfer of equity agreement and will cost you several hundred pounds a time so you don’t really want to be doing this. You would need to use different solicitors to represent each party too.

If one of you paid in a lump sum you could just amend your agreement upon sale to include that. That will be much cheaper than a formal transfer of equity.

 

[413x]

Your best bet is probably to have your solicitor draft an agreement that upon the sale of the property you both get your deposit amounts back first, then the remaining equity is spilt based on your ownership percentage.

Changing your ownership percentages will require a transfer of equity agreement and will cost you several hundred pounds a time so you don’t really want to be doing this. You would need to use different solicitors to represent each party too.

If one of you paid in a lump sum you could just amend your agreement upon sale to include that. That will be much cheaper than a formal transfer of equity.

Thanks for this.
Really helpful I'll talk to the soliciters about it when we come to that point.

And yeah, we wouldn't want to be making loads of changes if it's costly each time (I guessed it would be).

Thanks for your input everyone

 

[Psycho Sonny]

We are drawing up our contributions for our ownership of the house as we have greatly differing deposit amounts

what we have at the minute is say 90:10 deposit
my gf will pay more than 10% of the mortgage and thus after the fix term be 80:20

we hope over pay, we might get promotions etc,
if we say 80:20 in the legal forms how easy (and costly!) is this to change?

say my gf won 10k on the lottery and the ownership went 70:30.

cant see any conclusive info on this, but must happen a lot!

What does 90:10 deposit mean?

As in a 10% deposit on the house? or You are putting in 90% of the deposit and she putting in 10% of the deposit?

If your GF pays more than 10% of the mortgage how does this then become 80:20? And 80:20 of what?

Also if your gf wins £10K on the lottery how does ownership go to 70:30? is the house worth £100K?

 

[413x]

What does 90:10 deposit mean?

As in a 10% deposit on the house? or You are putting in 90% of the deposit and she putting in 10% of the deposit?

If your GF pays more than 10% of the mortgage how does this then become 80:20? And 80:20 of what?

Also if your gf wins £10K on the lottery how does ownership go to 70:30? is the house worth £100K?

She's putting in 10 I'm putting in 90 percent

If she puts in 30pc of the mortgage repayments she would (after our 3 year term) have a 20pc stake of the paid off amount (not the real real numbers, I've done them based on what would be paid off by that time)

If she suddenly won (or whatever) x amount and over paid this into the mortgage she would have a bigger stake in the paid off amount

 

[413x]

I don't think this is how equity works.

It isn't how much of the mortgage you pay but the value of the property at the time.

Say for example the house doubles in price, your GF only has to pay half the value of that 10% equity, the way you describe it. You are basically giving her a very valuable option which remember she doesn't have to take up if the house price goes down.

Ignoring the simple economics which I can easily understand, I'm no lawyer, but I doubt if you split it's as simple as how much you paid (mortgage or equity).

I'm unsure of how increases would affect this.
If she's paying more of the mortgage than 10pc (the plan) I'd just assume that she would have whatever that percentage is of the increase. That's where it gets a bit complicated

 

[Psycho Sonny]

She's putting in 10 I'm putting in 90 percent

If she puts in 30pc of the mortgage repayments she would (after our 3 year term) have a 20pc stake of the paid off amount (not the real real numbers, I've done them based on what would be paid off by that time)

If she suddenly won (or whatever) x amount and over paid this into the mortgage she would have a bigger stake in the paid off amount

that sounds awfully complicated.

so she gets to put in less. pay more over time to up her share and she then gets full benefit on any increases even though it was your money used to buy it in the first place?

i would try and do as even a split as possible and keep it at that ratio permanently.

if she wins £10K on the lottery she should just invest it instead of overpaying the mortagage, etc.

so do an initial split and keep to it. so either you reduce your deposit and invest it or she increases her end.

so it's 80/20 from the start or 70/30 from the start. i'm assuming you earn a lot more than her based on what you have given us so far.

just pick a split and stick with it. if you have extra money invest it elsewhere.

alternatively if she doesn't have the cash right now. what you can do is loan her the money and get the solicitor to put it into a clause of the title. as in if she tries to sell the property you get the loan back first before she see's a penny. then write up a contract saying you agree to loan her x amount over x years at x% interest.

after all she should pay interest because her "share" of the house will pay her back more than the interest. otherwise technically it's your share.