DH thinks I’m ripping him off

[EmmaG78x]

Hi, big disagreement with DH about the proportion in ownership of our house.

When we met I’d just bought a house but We moved in together and joined finances shortly afterwards. Everything was split equally including the mortgage but this was much cheaper than if he was renting. 8 years later we used the profit from the house as a 20% deposit for a house. Noting else was used as a deposit so we split ownership 75:25 in my favour.

Now, 5 years later and we are about to change mortgage providers. DH has mentioned we should now move to 70:30in my favour and continue until it’s 50:50 in another 20 years.

I want it to remain 75:25 forever as the deposit was from selling my house and he earns a lot more than me so me and the kids will need more if he leaves me.

He argues we’ve had joint finances the whole time and he earns a lot more than me. (about 50% more until I went part time once DS1 was born so now about double)

AIBU to keep things the way they are?

DP and I own our home like this. I own 66.7% and he owns 33.3%. This is because I put down 33% and we got a mortgage (50/50) for the remaining 67%. This 67% is split half and half.

If we split up our living together agreement says that the other has first refusal at market rates to buy the other out, or we can sell and I would get 67% of the equity and he would get 33%.

I'm unclear why anyone thinks this is unfair?

@YogaDrone

The amount you put in as a deposit wouldn’t equate to 33% if you did split in future - because house price inflation isn’t the same as money market rates inflation?

Eg if you put £30k towards a £100k house but the house is worth £500k and your £30k (adjusted for inflation) is day, £60k*

*all figures made up

£60k isn’t the same proportion of the new house price because the value of £1 in cash isn’t going to increase at the same rate as £1 in house price terms.

@Yogadrone

Actually the split is only 67 / 33 once the mortgage has been paid off. Day 1 when the only person who has paid anything is you it is 100 / 0. With each mortgage payment your share goes down and his goes up.

So I think it's unfair but not the way everyone else does...I think it's unfair to.you!

Personally I don't think percentages is the fairest way to consider investment value because the housing market is so volatile and because a home is not generally viewed simply as an investment.

If 20k buys you 20% of a 100k house which then increases in value to 200k, personally I don't think it's fair to assume you always own 20% when that value has doubled. Of course that would be true in the sense of a pure investment, but in a family home it doesn't sit right with me. If both parties are contributing then to me the cash value of the deposit is what should be protected rather than the percentage of the original deposit.

So how would my situation work for you, OP? When we bought our house 20 years ago we both put down 50% of the deposit. We have separate finances and for a few years he paid the mortgage and I paid all other bills, for a few years we reversed. Then I had an inheritance and paid the mortgage off. In your opinion, who “owns” what proportion of the house?

I think that if you are paying the mortgage from joint account then it should be 50/50. In case you divorce then the deposit you put down should be returned to you from his share. I'd you paid 75% of joint mortgage then you should have that share if that's your agreement.

I've only ever rented in the UK but where I'm from fits common for couples (married or not) to have a separate mortgage. So both couples pay off their own share. In some cases it's not 50/50 and therefore it's easy to do alternative % of ownership. This is convinient if people have different finances when purchasing house or different priority in payments. Is this a possibility?

@elassar

That's a totally valid decision for a couple to make. A home doesn't have to be treated like an investment. As long as people understand their decisions and the potential risks/downsides.

(BTW 20% deposit == 20% of the equity is not really the way an investment should work either, it really needs to be adjusted based on what each party has actually contributed because mortgage payments change the ratio over time, see my illustrations)

I thought it was all 50 /50 when married.
I've never worked but help myself to the pot, it's all our money.
i couldn't be doing with separating stuff, so difficult to work out.

Iggly I'm not sure I follow. In you example if I put down £33k on a £100k property but then we subsequently sell for £500k, a five fold increase, my initial £33k is now £33x5 isn't it? Not doubled.

Bibbly yes I agree, but that was a chance I took and we were in a rising market. We sold that house 5 years later for 30% more than we purchased it for. We carried over the 33/67 split to the new house, so my if my initial 33% deposit was £150k it's now closer to £200k. Should the market crash entirely then I'm scuppered of course!

For me the property is an investment. DP earns 50% more than me and as a result of this his pension on retirement will be greater. We both have life insurance payable to the other covering he full value of the mortgage and our wills are mirror wills leaving our estates to our child with the proviso that the remaining partner gets to stay in the property, or downsize, until death or remarriage. Neither of us is looking to make the other homeless. But I do want my initial investment to be recognised should we split.

You are married, therefore these conversations you have with your OH about what percentage each of you owns are pointless. You both own the whole lot together, you are counted as one and if he wants to, he can go for half if you divorce.

I divorced after 4 years, having put 90k into a property with my ex putting 20k. He would have been entitled to half no matter who put what in. I could have lost most of my investment- luckily he was happy for us both take what we put in and split 50/50 on what mortgage payments we had already made. Not everyone is that fair.

"For what it’s worth the deposit I put in was over £200k."

Is this how much deposit you put in on the original house that you bought on your own? And then the profit from selling that house was then used to fund a 20% deposit on your current house? So...your current house cost at least a million pounds?! Jeeez, not short of money then! Sounds like you'd probably be okay financially if he did leave, unless you live somewhere ridiculously expensive like London.

@fluffygal incorrect if there is a ‘declaration of trust’. A legal document which protects the deposit for the person who paid it, or the deposit percentages (who paid what),

Financial abuse of a sort

@Heartofgoldheadofcabbage if you wanted to make it fair then you are actually very wrong, your DH should actually pay the (deposit you paid + inflation rate based on when you paid your deposit) and not the percentage of the house, no wonder he is upset about you wanting him to pay the same percentage, he is getting ripped off in that deal as much as OP's DH is in the deal she is offering him

You should remove your original deposit and then revert to 50/50 unless you have been paying in more than him- (unlikely). You are currently being unfair and financially abusive to him and his contribution. Are you like this with everything ? Maybe you need some counselling to look at your behaviour ?

You are being very unfair. You are married and assuming he had contributed more to mortgage in my opinion it should be 50/50. If you have to have more it should be your deposit back up on sale of the house and the remainder split 50/50. If I were your husband I would be very annoyed at your reasoning

Emma I read your original post with interest.
When I met my now husband, I had already bought a house (with a mortgage)
He was renting and moved in with me.
When we married the house and mortgage was put into joint names and we had/have 50/50 ownership.
It absolutely didn't occur to me to do otherwise.
I've never thought about the deposit I paid, which was 5% of the purchase price. Nor the loan I was repaying to my dad for central heating I had put in.
I was young and in love, that's my excuse! Not saying you're not, but I honestly never gave it a thought.

@Stoppinby I’ll let you have that discussion with my solicitor. We had the discussion with legal advice and this pointed us in the direction of the declaration of trust.

@StoppinBy

"if you wanted to make it fair then you are actually very wrong, your DH should actually pay the (deposit you paid + inflation rate based on when you paid your deposit) and not the percentage of the house"

Sorry, from a purely investment POV (ignoring marriage, relationships etc) that's bollocks. Fundamentally, the value of a joint investment (gain or loss) should be split according to the amount (monetary or other) that each party put in.

What you are describing (returning the original cash plus interest using a pre-agreed rate) - makes the deposit a loan not an investment in the property.

I see what you are saying but it is not a business deal, it is an agreement with your DH to pay the same amount as you - not the same percentage but the same amount(clearly he has an issue with what you are asking so views it that way too) - and that would be the value of your deposit plus inflation, not the value of a certain percentage of your house.

IMO you are in a pretty shite marriage if you want to rip your DH off in that manner.

I have a declaration of trust (think that's what it's called) as I put a 30.000 deposit down on our first house. This was 30% of the price and meant that I would get 30% of any profit with the rest being split 50/50. We are married with 2 kids now and on our 3rd house - not sure whether the 'declaration of trust' is still relevant really. We have both had inheritances since which have been shared as family money and we both pay the mortgage. I would now be fine with 50/50

@Heartofgoldheadofcabbage

This is why I think it is a shite deal for your DH
Of course these figures are just an example.. If your house has doubled in price since you purchased and I assume a $200,000 purchase price, now valued at $400,000 then

The deposit you paid was 30%, so $60,000,
Your DH's 30% is $120,000

If your property price was to stabilise and at the time you split it was the same as when your DH paid in his deposit then he would make nothing off of his deposit, you make a return of $60,000 (not accounting for inflation/fees etc), then the remaining 40% is split between you so now your DH walks away with only 20% of the house value instead of the 35% that would be his if he left the agreement as it is at the moment (again not taking in to account any fees).

So in buying in to the deal you are offering him he is actually worse off than before unless your property continues to rise dramatically in value which is unlikely. In the case of the value of your property dropping then he is worse off again.

Sorry I meant to say that once he removes the deposit from amount he receives he will walk away with 20% so if he put in nothing he will get the 35% but if he pays in the deposit he will get that money back plus the 20%.

You are ripping him off, would you be happy in his place..... nope.

@StoppinBy
IMO you are in a pretty shite marriage if you want to rip your DH off in that manner
😂 ok then...😂😂😂