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Original poster

Dividing house, is this fair or not?

134 replies

geranium66 · 01/10/2022 07:08

Bought a house 2 years ago with partner. We’ve separated. The house has increased in value by 30%. My brother is taking over his side of the mortgage for the future; I will stay in the house. I plan to give my ex partner back all the monthly mortgage payments he has paid, plus his deposit and increase it all by 30%. Would you consider this fair or is there a better way of working it out?

OP posts:
Idontgiveagriffindamn · 01/10/2022 08:28

Legally he is entitled to half the equity which in your example would be £67.5k - minus half the legal costs. You’d also realise this if you were selling the property which you are not.

Other points to consider:
Have you got 3 valuations and taken the average of them to get the valuation?

Also are your figures for the current mortgage and original purchase price / deposits correct? If so that means you’ll have paid off £28k in 2 years. Just make sure you’re looking at the actual money taken off your mortgage and not just the sum of the mortgage payments!

itbemay · 01/10/2022 08:29

ivykaty44 · 01/10/2022 07:46

If the house was 200k and you both put in £10k deposit

and is now worth 230k then pay him

his £10k back + £15k

so a total of £25k

if you were to start paying him his half of the mortgage payments back, then surely he’d he’d not be entitled to the profit from his investment- as he not have made an invest as he’d got that money back 🤷‍♀️It’s not like going to the bookies where you get your stake back if your horse wins the race

This! Well explained!

Hearthnhome · 01/10/2022 08:31

geranium66 · 01/10/2022 08:20

Yes, I agree with this. If it’s £67,500, he would have turned 10k deposit and about 3k mortgage repayments into 67k in a matter of two years. That’s mad surely.

Show quote history

How is it mad?

You did the same but are keeping your money in the house. If you were selling and both walking away you wills both get 67.5k each, minus legal fees.

Why do you think he should get 18k and you get your own 67k plus 49k from him.

Interested in this thread?

Then you might like threads about this subject:

General money
hellosunshineagainxxx · 01/10/2022 08:31

fruitstick · 01/10/2022 08:09

I would also add that given the housing market is about to rank, I'd be tempted to sell completely. .

Same

1Wanda1 · 01/10/2022 08:32

You've both contributed equally to the house price so far (equal deposit, equal mortgage payments). So you are 50/50 entitled to the value of the house.

If he owned the whole house and your brother was buying it from him, the price to be paid would be the current market value, which you might get by having 3 estate agents value it and take the middle one, or the average of the 3.

As he owns half the house, the value he is entitled to is half of the current market value. Not his mortgage payments and deposit plus 30%.

It's probably all academic now given the state of the mortgage market and housing market. House prices will go down, so might be better for you to wait.

Piffle11 · 01/10/2022 08:35

I'm presuming you have had proper valuations, not just going by what's for sale nearby? When my ex and I split up, we had a house we had bought for £100,000 and was now worth £130,000. I hadn't put in any deposit, but everything else had been paid equally. No help to buy scheme or anything like that… So the equity was £30,000, and he gave me £15,000 to buy me out.

I think you're over complicating things… I really don't understand why he would be getting half of the inflated equity, plus his mortgage repayments? I've never known anyone get their mortgage repayments back in situations like this. As others have said: chances that the market will thanks soon… You could end up in negative equity very easily. I think I would just sell.

Laughsandgiggles · 01/10/2022 08:35

Not sure you are understanding this OP.

If you were to sell the house tomorrow and split the money 50/50 taking into consideration all the outstanding mortgages and estimate of legal fees how much would your share be??

Wheelz46 · 01/10/2022 08:36

OP if your partner was staying in the property, would you be happy with a 18.5k parting gift? Or would you want to split the equity and walk away with 67.5k?(minus solicitor costs).

Property prices increase, that's how it works, so not mad at all? If your partner accepts the 18.5k and you sell then decide to sell the property, how much equity would be in your bank account?

FirstnameSuesecondnamePerb · 01/10/2022 08:36

Am I going mad? Surely the outstanding mortgage and the £50k equity loan are deducted to assess the equity?? Nobody has paid it off/down and that liability still exists.
Honestly, offer him £18,500 less half the legal costs. If he doesn't agree, bung it on the open market and sell.

TooMuchToDoTooLittleInclination · 01/10/2022 08:37

My advice would be to check your figures.

where did you get £375000 from? That's not necessarily what it would sell for if that's Agents valuing it.

get up to date figures on the mortgage and the amount owed to shared buying scheme.

once you're confident in those figures then take what's owed away from what it's valued at and less minus fees is what you need to split 50;50 so if your figures are correct (doubtful) the £67500 is what he's owed. 50% of the profit the house has made since you bought it. Why do you think you should profit more than him??
(morality issues aside)

the BEST thing to do would be to sell it, use your capital to buy a house/flat that's all yours! Cleanly.

Original poster
geranium66 · 01/10/2022 08:40

TooMuchToDoTooLittleInclination · 01/10/2022 08:37

My advice would be to check your figures.

where did you get £375000 from? That's not necessarily what it would sell for if that's Agents valuing it.

get up to date figures on the mortgage and the amount owed to shared buying scheme.

once you're confident in those figures then take what's owed away from what it's valued at and less minus fees is what you need to split 50;50 so if your figures are correct (doubtful) the £67500 is what he's owed. 50% of the profit the house has made since you bought it. Why do you think you should profit more than him??
(morality issues aside)

the BEST thing to do would be to sell it, use your capital to buy a house/flat that's all yours! Cleanly.

Yes, ok I’ll check them. The house was valued by 3 estate agents who valued it assuming I wanted to sell it.

OP posts:
Laughsandgiggles · 01/10/2022 08:41

@FirstnameSuesecondnamePerb
The figures above take into account the outstanding mortgages and loan.
House was £280,000 with £190,000 mortgage left plus £50,000 loan. Equity of £40,000.
House now valued at £375,000, profit of £95,000.
Total equity of £135,000 split 50/50 is £67,500 each.
It's not that difficult to understand surely??

TooMuchToDoTooLittleInclination · 01/10/2022 08:44

FirstnameSuesecondnamePerb · 01/10/2022 08:36

Am I going mad? Surely the outstanding mortgage and the £50k equity loan are deducted to assess the equity?? Nobody has paid it off/down and that liability still exists.
Honestly, offer him £18,500 less half the legal costs. If he doesn't agree, bung it on the open market and sell.

@FirstnameSuesecondnamePerb

i don't know you're going mad, but I think your stuck in a loop!

presumin the OP's figures are correct (which I doubt, but supposing....)

House now with £375,000

they owe £190,000 mortgage
plus £50,000 (shared scheme £240,000

equity in the property £135,000

£135,000 /2 £67,500

(adjusted a bit by any costs)

Wheelz46 · 01/10/2022 08:45

@FirstnameSuesecondnamePerb the property is worth 375k with 190k adding the 50k makes the loan value 240k, leaving 135k equity. If the property was sold both parties would split the 135k so get 67.5k each, less with legal fees?

If you were the other party, would you accept 18.5k? Offer it yeah, but who on earth would accept that?

helleborus · 01/10/2022 08:45

@geranium66
Was the £50,000 Help to Buy contribution actually an equity loan?

If this was the case, it was for 50,000/288,000 = 17.36% of the purchase price. My understanding looking at this link
www.gov.uk/help-to-buy-equity-loan
is that the amount you have to repay is based on the current market value of the house, so you would need to repay £375,000 x 17.36% = £65,100.

If this is the case, I would calculate the amount due to your ex as:
Total equity = £375,000 - £65,100 - £190,000 = £119,900
His half = £119,900 x 50% = £59,950
and then as others have suggested, I would deduct half the legal fees from this.

Please ask your solicitor to help you clarify the amount due under the Help to Buy scheme and make sure you are clear exactly what the financial position would be if you were selling the whole property, then base your payment to your ex on that.

TooMuchToDoTooLittleInclination · 01/10/2022 08:47

geranium66 · 01/10/2022 08:40

Yes, ok I’ll check them. The house was valued by 3 estate agents who valued it assuming I wanted to sell it.

Show quote history

@geranium66 have a look at your local previous ''for sale' v 'sold for' prices. Agents always over value prices to home owners. You could be giving him equity that doesn't exist!

allboysmum3 · 01/10/2022 08:48

Get the house valued. Work out what equity you have and then give him 50%.

Original poster
geranium66 · 01/10/2022 08:50

helleborus · 01/10/2022 08:45

@geranium66
Was the £50,000 Help to Buy contribution actually an equity loan?

If this was the case, it was for 50,000/288,000 = 17.36% of the purchase price. My understanding looking at this link
www.gov.uk/help-to-buy-equity-loan
is that the amount you have to repay is based on the current market value of the house, so you would need to repay £375,000 x 17.36% = £65,100.

If this is the case, I would calculate the amount due to your ex as:
Total equity = £375,000 - £65,100 - £190,000 = £119,900
His half = £119,900 x 50% = £59,950
and then as others have suggested, I would deduct half the legal fees from this.

Please ask your solicitor to help you clarify the amount due under the Help to Buy scheme and make sure you are clear exactly what the financial position would be if you were selling the whole property, then base your payment to your ex on that.

Yes this is correct.

Solicitors have said there is no legal formula for this, it’s something that we have to agree on ourselves.

OP posts:
TooMuchToDoTooLittleInclination · 01/10/2022 08:53

geranium66 · 01/10/2022 08:40

Yes, ok I’ll check them. The house was valued by 3 estate agents who valued it assuming I wanted to sell it.

Show quote history

@geranium66

i also said

get up to date figures on the mortgage and the amount owed to shared buying scheme

but @helleborus has explained it much better. & a poster earlier explain the whole thing to and as it's what she does for a job, I'd read that several times until you understand what she said.

fruitstick · 01/10/2022 08:55

OP

If you have him £18,500, how much equity would you have left in the house and how 'mad' would it be on a £10k investment.

If your brother is buying his half, how much is he contributing?

You seem to be winning in every direction here, or you've promised your brother a deal that's too good to be true.

fruitstick · 01/10/2022 08:57

There's no legal formula one but there is a sensible and fair one which has been suggested.

Imagine he was staying in the house. How much money would you accept, and would you be happy for him to walk off with the rest.

Original poster
geranium66 · 01/10/2022 09:00

Ok, I see. What a situation!
If we sold, im unable to get a mortgage on my own ( ltd business owner of less than two years)

He cheated, which makes this even more galling. Honestly though if the boot was on the other foot, I’d walk away from this with the £18k with a 30% increase on my money. I was actually trying to be reasonable but I see that you think I was not.
thank you all.

OP posts:
Isyesterdaytomorrowtoday · 01/10/2022 09:01

current market value
less value of help to buy to repay it now
less outstanding mortgage debt
divided by 2

NoSquirrels · 01/10/2022 09:07

The solicitors have told you there’s ‘no formula’ but there is - you put in equal deposits, you paid the mortgage 50-50, the house has increased in value so you split the equity (value minus debts) 50-50.

His cheating is irrelevant. That you think £10K increasing to £67.5K is ridiculous is irrelevant.

You both own 50% so he’s remunerated by 50%.

Idontgiveagriffindamn · 01/10/2022 09:07

You know based on your figures if you want him to accept £18.5k you’re actually asking him to sell you his half of the property at less that he bought it for????
That’s crazy.

I still think your figures for the current mortgage must be wrong. I can’t see how you’ve paid off £28k of equity in 2 years. Have you asked for a redemption statement?