To ask how you would split a house sale?

[HoneyIshrunktheBiscuit]

You have a couple -

Person A earns £44000
Person B earns £27000

They have been together six years and want to buy a house together. Have saved up so they are paying the deposit 50/50.

Mortgage repayments on the house would £1400 a month. Person A would be paying £850 person B paying £550 to reflect the wage difference.

If the couple were to split how should the sale of the house be split? To mirror the mortgage repayment split or 50/50.

There's some decidedly dodgy advice on this thread; you really do need to speak with your solicitor.

We had the same scenario and never considered anything other than 50/50

As it happened we married and have kids so it's not relevant anymore

What happens if B gets a promotion and earns more and A is made redundant and then earns less than B?
You would need to continually update the %
I would say 50/50 for all but I do agree with a % split for all bills. Appreciate you are being logical but I view a relationship as a partnership not about who earns more so who owns more

I can see what you are trying to do, but I don't think it's going to work. Have you considered pooling your money, paying out a lump sum to cover all the monthly expenses, a chunk for savings and the remainder split for spends.
I know someone who continued with a % contribution, and it became silly, each paying for half a new tv, a microwave...
Pool the lot now.
If the higher earner baulks at the idea find out exactly why.

50/50 on deposit and proportionate to contribution thereafter, to be reviewed for life changes. Especially children.

Buying a house with someone is not a lifetime commitment. TBH neither is marriage - but it at least starts hoping to be. Whereas plenty of people see a house purchase as a lesser commitment than marriage. It's practical, and it can be a "see how we go" situation.

Would you want to pay more than your boyfriend then watch him walk away with £1000s of your money when you dump him for cheating on you?
My friend (married) paid far more mortgage than her XH, and the deposit from inheritance. The kids stayed with her. He earned £60K to her £80 and had never been a SAHP. In fact, she had moved to facilitate his career, reducing her own options (though she still had good options). In the end she had to give him £160K. Which smarted a bit, given that she dumped him for fucking prostitutes in her home.

My fiancé is moving in with me. I love him and I'm committed enough to him to marry him. Pre-nup. He will not have a share of my house, nor I his. Splitting 50/50 is not a superior display of love or commitment.

If the higher earner baulks, find out why?

My why is: why would I give away my money to someone I have split up with?

If you don't split, it doesn't matter how you hold it. If you do split, why on earth should the person who put in less walk away with the other person's money?

Why in the works would person A agree to 50/50

Should be split to reflect how much each has put in

*world

Hang on a minute. If you are paying the deposit 50:50 then it completely depends when this theoretical split happens as to what is fair.

The maths is a bit complicated at this time on a Saturday morning but the closer you are to the start of this mortgage the closer the split should be to 50:50 because the deposits were 50:50 and in the early years not much of the capital will have been repaid. A split that just divides the original deposits 50:50 and the rest in proportion to mortgage split would be massively biased to A and unfair to B.

In the event of a split, the amount received post-sale after deduction of all fees is made of:

[Amount still owed to bank] + [original deposit] + [capital contributions made] + [increase in house value]

Capital contributions made are only a fraction of the monthly payments, much of which is interest.

Say that it is being bought for £400k now with a mortgage of £340,000 and a deposit of £60,000 and it is sold when the amount still outstanding is £270,000 but house price rises mean the amount received is £470,000.

By the previous suggestions on this thread A would get £30,000+£85,000=£115,000 and B would get £30,000+£55,000=£85,000 but this is ignoring the fact that the growth on investment is significantly due to expansion grown of the value of the initial deposit which was contributed 50:50

I would say that the deposit is split 50:50, the difference between the amount borrowed and the amount still outstanding is split according to contributions and then the remaining equity is split according to the ratio of those amounts added together.

So the difference in what was borrowed and what was still owed is £70,000

Initially before the rest of the equity is split A gets £30,000+42,500=£72,500 and B gets £30,000+£27,500=£57,500 - that is representative of what each of them actually put in. The remaining £70,000 should therefore be split in the ratio 725:575 which simplifies to 29:23 so A gets a further £39,000ish, total £111,500 and B a further £31,000ish total £88,500

In this example the difference from the simpler system isn't much, but the less house price growth and the higher the amount still outstanding is, the more significant the differences will be.

All that said, once kids are in the picture it all has to change anyway as the contribution to the household of childcare effort is worth a huge amount and any splitting agreement must not penalise a partner for contributing less financially due to having contributed more in other ways.

I'm with @Heartoverheadhouse

Ellisandra raises an important point - I do think that it makes a difference where you are in your lives, and whether either you already have any assets.

DH and I met in our early twenties and in financial terms we both brought nothing to the marriage but student loans. Everything that we have, we have built as a team, even when various promotions have come along and we have out-earned each other. There is therefore no question that we would do anything other than 50:50, which is not a smug comment on our commitment but recognition that neither of us would have that 50% without the other's contributions. I appreciate that I might have felt differently had we met later in life with our own individual assets.

If you are asking this then you shouldn't be buying a house together.

If you are person B then run while you can-very fast- you are planning on moving in with someone who doesn't value you in ay way.If you are person A then you should be ashamed of yourself.

50% split. It is a partnership. that is what partners do,

As an thought-provoking excercise, A&B should also consider what should happen if the house value goes DOWN and they need to sell
Would A pay out more of the loss than B?
Would the deposit be factored in before or after the negative equity?
This might not be a scenario that's very likely in your location ( although none of us know) but if A finds themselves thinking that they should both lose out 50% in that circumstance, then they should be open to sharing the potential gains 50% too

No georg it isn't what 'partners' do. Not at all. You don't speak for everyone here!

Some people choose to and some don't. This couple aren't getting married - they're just moving in together. There's no reason at all why A should give money away to B. She can if she likes, but she doesn't have to in order to prove some nonsense about partnership.

My XH drove a Porsche which he was paying for. Should I have said "I know I'm not paying for it, but every other week you need to take my Corsa instead - because we're a partnership". Of course not. A partnership means my boyfriend happily let me take his car occasionally when I fancied it - back then, we were in love. But I didn't assume 50/50 ownership of something I didn't pay for

No georg it isn't what 'partners' do. Not at all. You don't speak for everyone here!

If you are committed enough to buy a house together and plan children as the Op does then you should be willing to share everything in your life.

Why wouldn't you drive their sports car and they take your corsa?

I don't get people who have his and hers money. We share everything and always have.

Don't forget that you need to think about what happens should one of you die. If you aren't married and are tenants in common you need to make provision for what happens in the event one of you dies or your heirs could have the right to your share of the house leaving the survivor having to sell up and find somewhere else.

Have a trust deed drawn up: you each get your deposits back then... You'll need to have a think about life plans. The balance split proportionate to your mortgage payments is fair now, but as PP have said earnings and circumstances change. State what you both think is fair. So long as it and you're both happy with it, your solicitor will put it in the Deed.
And yes, make a will.

The balance split per earning isn't fair as it doesn't take into account that the capital put in has enabled the purchase and will have also grown in value. It would be unfair on the lower paying to miss out on the growth of that asset when most of the monthly payments relate to interest

If you are asking this then you shouldn't be buying a house together.

Some people aren't delusional enough to risk their financial security because "love lasts forever".

This sounds crazy to me. Are you going to live where you each pay a fixed percentage of the grocery bill/utilities/insurance?

What if B pays less of the mortgage but all of the food bill and then still gets a lesser percentage of the equity? Is that fair?

What if one of them becomes unable to work? They have children?

If you are buying platonically then you need to be tenants in common and pay half each of everything, regardless of how much you earn.

If you are a couple, you pool everything, keeping back the same amount each for personal spends/savings etc.

TheAntiBop growth of the capital might be a factor put in in other investments but it's not taken into account in Trust Deeds. It's a known factor of house ownership that a lot of the monthly mortgage payment is interest to start with.

There is so much more to owning a house than the math/payments.
Who pays for the decorating, then there is maintaining it, then insurance.
Will your entire life be split 60/40.

Well, if they were not a couple then twobluefishs approach is fine. But if they are a couple it's not so satsifactory. First, because over time it increases the financial inequality between them. A has not a higher income and a higher stake in the property, and that inequality gets bigger and bigger. Second, because it doesn't take changing circumstances into account. Would the agreement have to be re-drawn if partner A was made redundant? Third, because quite often a partner in a long term relationship makes decisions for the financial good of the couple which works against them as an individual if they split up.

Having an agreement is sensible though. When DP and I bought a house as an unmarried couple the solicitor insisted that we draw up a clear legal agreement just like any other co-owners. We were in a different position from A and B because I put in all the deposit while DP paid more of the mortgage. Our agreement started with me owing all the balance; and each year for 10 years DP's proportion increased until after 10 years we would own half and half, where it stayed. So over time we tended towards equal shares, which I think is better for a couple. Anyway after a few years we got married which voided the agreement.

So I'd say, if A and B are a couple and they expect to stay together in the long term, and most especially if B is likely to make decisions which support A's career and income at the expense of B's own, then they should either get married and pool resources or keep the ownership 50-50 even though it's to A's detriment if they split up in the short term.

Sorry - not owing, owning all the balance!