Page 4 | A money one - who is being unreasonable?

Lalaland67 · 27/02/2025 21:00

Tarantella6 · 27/02/2025 20:47

If there is no equity then surely Josh can stay in the house as long as he can pay the mortgage? He doesn't need to buy Sophie out, there's nothing to pay her.

Or will the mortgage company not allow him to be the sole borrower?

It sounds like Sophie wants to buy another house (with another unsuspecting man fronting the deposit!) so wants to release herself from this mortgage.

Can Josh afford to buy her out? That’s probably the best solution. I presume he’ll have to prove he can cover the mortgage on his own.

Isthismykarma · 27/02/2025 21:02

GrannyAchingsShepherdsHut · 27/02/2025 20:57

However, you could also say the house is 57.1% Josh’s and 42.9% Sophie’s, so if they're in negative equity (which is I think what you're saying?) Josh should pay 57.1% of whatever extra is needed to pay off the mortgage and Sophie 42.9%.

If that's how they would have split any profit, had the value not reduced, then you could argue it's what that should do with the debt.

On balance I think 50/50 of whatever debt there is the best he can hope for. Far better for him would be to keep the house and take her off the mortgage if he can.

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But the mortgage was for 86% of the property and taken out 50/50 so paid off 50/50, so 14% proceeds go to Josh then for the mortgaged 86% they have 43% to each of them. They then pay half of the joint mortgage each with their proceeds.

DonnaSueWeloveyou · 27/02/2025 21:03

AnnaQuayInTheUk · 27/02/2025 19:55

A family member, let's call him Josh, and his girlfriend, Sophie, have been together for 5 years. Three years ago they bought a house together. Josh had inherited some money so put down the deposit of £30k, Sophie didn't have any money so didn't put down anything.

The house They loved was £210k so they used Josh's inheritance as a deposit and took out a joint mortgage of £180k. All good.

However, they have now split up. They've had 3 house valuations, and have realised that the house has gone down in value. On the advice of the EA, they are putting it on the market at £189k but have agreed that they will accept £180k for a quick sale.

The issue is this. Assuming the worst case scenario that the house sells for £180k, should Josh accept he's lost his inheritance and suck it up, or should Sophie pay Josh £15k as her "share" of the loss?

AIBU - Josh should suck it up
YANBU - Sophie should pay Josh £15k

They are both aware that the house might not sell at all!

What’s the legal agreement? If it’s 50:50 then they should split it & Josh would learn the hard way to get legal advice before entering into such an agreement.

If it’s not 50:50 then I guess Josh will get his deposit back then they split the remainder in half. Or they will have to repay the mortgage company first, then Josh gets as much of his deposit back as possible, with anything over being split in half.

Mauro711 · 27/02/2025 21:03

Lalaland67 · 27/02/2025 21:00

It sounds like Sophie wants to buy another house (with another unsuspecting man fronting the deposit!) so wants to release herself from this mortgage.

Can Josh afford to buy her out? That’s probably the best solution. I presume he’ll have to prove he can cover the mortgage on his own.

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Since they are in negative equity it’s just a question of Josh asking the mortgage company if he can take on the mortgage by himself and release Sophie.

pizzaHeart · 27/02/2025 21:07

Maxorias · 27/02/2025 20:10

Morally, he should have 30k minus a percentage of the loss in value, and they split the rest.

The house was worth 210 and is now 180, it has lost 14% of its value.

So Josh's deposit of 30k has lost 14% of its value, meaning he should have 25.800. Of the 154.200 left they should each have half, so 77100 each.

Meaning Josh ends up with 102.900 and Sophie 77.100.

Legally, that depends on what the papers say... She may be entitled to half.

I like this^ calculation. It looks fair and unemotional

paranoiaofpufflings · 27/02/2025 21:07

Ah, wait, my previous comment doesn't work - just re-read and realised there is no equity to split.

Are you Josh's parent? Not sure why but I get that feeling. Could you buy out Sophie so Josh can keep the house until the market changes and it goes up in value?

Maxorias · 27/02/2025 21:08

AnnaQuayInTheUk · 27/02/2025 20:55

@PyongyangKipperbang Sophie wants to buy a property with her new partner.

Would Sophie be happy for Josh to buy her out ? He could remortgage to pay her, or they might agree to payments in installments if Sophie is amenable.

Completelyjo · 27/02/2025 21:09

Why doesn’t he just buy her out? Her share will be minimal

Greyexpectations · 27/02/2025 21:11

Selling it would be madness.

She would have to take him to court to force a sale so Josh can buy a lot of time.

If he can’t take on the mortgage himself, can he convert to a BTL? It might need a few more ££ paid in to reach the 25% deposit requirement most BTL mortgages need.

There’s no equity in the house, so there’s nothing owed to Sophie, it’s just a matter of whether Josh earns enough to cover a £180k mortgage - or the rent yield would allow it to be remortgaged as a BTL.

Broccoli456 · 27/02/2025 21:11

I mean they've lost the equity in the house, so the £30k is gone.

Blondeshavemorefun · 27/02/2025 21:13

Ouch. 3yrs ago they bought. In that time house has devalued and she has found someone else and wants to buy with him

i would tell her to hold her horses - not rush into things and buy alone

Obv that’s isn’t what you asked

always ring fence a deposit

same thing sadly happened to my friend

she put down £40k - split up with her dh and house went down in value I think £50k. They bought too high price and wrong time 🥲

from what I R.E.M. they both took the hit and owed £5k each which they both had to pay off

she lost her £40k 🥲

Bearbookagainandagain · 27/02/2025 21:13

Isthismykarma · 27/02/2025 21:02

But the mortgage was for 86% of the property and taken out 50/50 so paid off 50/50, so 14% proceeds go to Josh then for the mortgaged 86% they have 43% to each of them. They then pay half of the joint mortgage each with their proceeds.

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But that's not how the order of priority for debt repayment work.
Even if Josh and Sophie had a valid, written agreement, saying that Sophie shall repay her share of the deposit in a situation like this, the mortgage is a secured loan against the house. The lender has priority and gets repaid first.

Then anything left - the equity - can get distributed to the owners or potentially other creditors.
Here there is no equity - the owners get nothing.

That's basic 101 of a mortgage, that's what they signed up for. They can't make up the rules afterwards because it doesn't suit them anymore...

Tryingtokeepgoing · 27/02/2025 21:13

Maxorias · 27/02/2025 21:08

Would Sophie be happy for Josh to buy her out ? He could remortgage to pay her, or they might agree to payments in installments if Sophie is amenable.

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Well, as there’s no equity anyway Sophie gets nothing. She just wants to be off the mortgage so she can move on to the next man / house. So unless there’s another reason to sell I think Josh’s best option is to see if the bank will remortgage to him alone. The legal / stamp duty (if any - I’m not sure) costs should be split 50:50. Though as I type this it occurs to me that the other reasons she needs to be off the deeds of this property is the second property uplift on the stamp duty for the next property purchase…

Abigaillovesholidays · 27/02/2025 21:13

I would think the best scenario for Josh is once the 180k is paid back, then he keeps whatever (if anything) is left. I can't see her paying him anything especially as she will have a new house to spend money on. She could probably take half of anything that is left but hopefully she would have enough morals to let him at least have all of it.

SnoopysHoose · 27/02/2025 21:15

There is no equity, therefore no funds to split, can Josh take the mortgage on himself and leave Sophie free to buy again?
I'd not be giving Sophie a penny.

Tiredofallthis101 · 27/02/2025 21:15

Can Josh get a new mortgage solo and take Sophie off it? If the house is worth nothing surely that's the easiest way forward?

Chiconbelge · 27/02/2025 21:15

Sadly, it’s not about what’s fair or about what should happen. What did they do when they bought the house? If they own it jointly and Josh took no steps to protect his deposit either by owning more than fifty percent or by something like a deed of trust then I’m afraid he’s lost it in the scenario you present. All this maths doesn’t help now - that should have been agreed beforehand.

GrannyAchingsShepherdsHut · 27/02/2025 21:17

Isthismykarma · 27/02/2025 21:02

But the mortgage was for 86% of the property and taken out 50/50 so paid off 50/50, so 14% proceeds go to Josh then for the mortgaged 86% they have 43% to each of them. They then pay half of the joint mortgage each with their proceeds.

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There isn't anything to give to Josh.

100% of the 180k sale is needed to pay off the mortgage. They've only had the mortgage for 3 years. It's not clear if there is also additional money that they need to find from somewhere to fully pay it off. If so, I think 50/50 is the best Josh can hope for.

musicforthesoul · 27/02/2025 21:18

Why is Josh not just removing Sophie from the mortgage/deeds if he wants to stay? Possibly a token buy out. It doesn't sound like she'd gain anything from forcing the sale if there would be no money left over anyway after the mortgage is paid off.

It doesn't really matter what anyone thinks is fair if Sophie isn't agreeing, legal position is the only one that matters.

carly2803 · 27/02/2025 21:20

wow sophie has it made 15k richer

josh is daft for not ring fencing his deposit!

morally, josh should have his 30k back - and then split the rest. Not sure how that works out if the price has gone down

DoYouReally · 27/02/2025 21:21

Josh should Sophie she has some cheek.
He contributed more initially and contributed more to repayments. Without Josh, she wouldn't have been able to have a house.

He should calculate every cost towards the house and propose splitting the loss in a manner than reflects same.

If she doesn't like it, she can take him to court.

Arcticrival · 27/02/2025 21:21

I'm not understanding the question.

If the house has fallen in value and the sale price will just cover the outstanding mortgage and sale fees then there will be nothing left to split/share after the sale.

Legally, he didn't protect himself. They own it 50/50. Mortgage paid off after sale and both walk away with nothing. Best option would be for him to get deeds transferred into his name if she agrees to that and bank happy he can afford mortgage on his own salary

Expecting sophie to just pay him 15k is unrealistic and not going to happen.

Quitelikeit · 27/02/2025 21:23

If you are his mum then you can be a guarantor for his mortgage I think

That way she can get her name off

BTW if you are his mum it was a big mistake not encouraging him to ringfence his deposit

cheseandme · 27/02/2025 21:25

sumsitupreally · 27/02/2025 20:10

If I was Sophie, I would be paying Josh £15k of the deposit back.
She can't expect to get equal reward when she put less in, if it wasn't for Josh she wouldn't have had the house at all.

This .

fufulina · 27/02/2025 21:25

If he hadn’t put in the deposit, they either couldn’t have bought or they would have had a higher mortgage payment. I would expect him to get him deposit back (arguably, with a nominal interest rate return, say 3% pa), and then split the loss over and above that. Why should he lose his deposit?