How to divide the equity of a house

[LabyrinthIntheforest]

Please advise me on how to divide the equity of the house. This is a hypothetical scenario, but let’s say the house was worth £100,000 when we bought it together. I contributed a deposit of £20,000. How should I divide the equity? I have two ideas:

1.	Divide the house value equally, so my ex’s share would be £50,000 and mine would be £50,000. Since I contributed £20,000, I would get that amount back. Overall, his share would be £30,000, and my share would be £70,000.
2.	Deduct my contribution from the house value, which means £100,000 - £20,000 = £80,000. Then we divide this amount in half, so each share would be £40,000.

Thank you ever so much xxx

How long were you together/in the house? If nothing was agreed you may have to take the hit. Did you pay the same into bills or did one pay more than the other?

Are you married?

Option 2 gives me £60,000 in total and £40,000 for him.

These two calculations give different amounts for each share. I understand that the numbers differ, but I want to know which method is the correct way to divide the equity of the house. Thanks

Thank you for your quick response. Yes, I contributed the same financial responsibility during the marriage.

If you’re married, the default is 50:50 regardless of who put in what.

Is there an agreement in writing your deposit is ring fenced? How reasonable are the two of you being?

This is all hypothetical really, but there's two options:

1. Your second option - you get the first £20K and the rest is split 50/50.
2. You get 20% to reflect the fact that your deposit has increased along with the equity in the house, and then you each get half of the remainder, so a 60%/40% split. (Assuming the purchase price was 100K and the deposit 20K - numbers will change depending on the actual values.)

Your first option makes no sense as it takes all of the deposit out of his share which isn't fair.

However, really as you're married the starting point will be 50/50 unless your deposit was ring fenced at the time.

Unless you have a deed of trust, or own it as tenants in common with different percentages (to account for the 20k) then its 50:50 split

But how much is the equity?

What's the value now and what's the outstanding mortgage?
How long have you lived there?

As you're married, what you put in is irrelevant. The start point is 50/50 financial split. The thing that would impact this is whether one partner earns significantly more than the other, and thus the lower earning partner would not be able to adequately house themselves or any children.

You are calculating this incorrectly.

As you are married - all finances are joint, so unless you drew up paperwork before purchasing to ring fence your £20k deposit, it’s considered a joint finance.

Does the house have a remaining mortgage on it?

A better example would be:

• Property valued at £100k
• Mortgage remaining (as an example) + £50k
• Therefore equity = £50k

A 50/50 split would be £25k each (although bear in mind, solicitor & estate agent fees would be taken off the equity & split between you)

Married =. 50/50

Being married means that it is jointly owned regardless of what you each put in. It is a marital asset.

On divorce it will be split according to the circumstances of your marriage and individual needs. A short marriage will lead to a different outcome than a long marriage. Your incomes and other assets will shape how things are split.

Yup.

Highlights why marriage is such a terrible financial contract for the unsuspecting wealthier / higher earner.

Legally 50/50. If he is doing the right thing morally and letting you have the deposit back then it would be £20K to you and split the balance, so 60/40 in your favour overall.

Split of jointly owned assets is not certain to be 50:50 regardless of who paid what. It will be based on needs. Hence the comment above

Highlights why marriage is such a terrible financial contract for the unsuspecting wealthier / higher earner

My ex took virtually all assets as they were a low earner and the DC was 8. That I had paid for everything did not diminish their needs for a roof over their head. The judge's logic was that over time I would catch up due to higher earnings.

If there are insufficient assets to go round, then both partners will have to adjust their lifestyle accordingly (downwards).

Married dues not equal 50:50

what it means is who pays what is largely irrelevant and monies paid in are not deducted from share, complicatied further if there are children of the marriage

if you can agree between you in your hypothetical scenario the correct approach is

house value less mortgage =100k, less deposit so 80k split 50:50 so 40 each

however this us unlikely to be a scenario awarded if it went to court

It makes me feel sick even to think about it ….thank you so much for your advice xxx

Your first option doesn’t make sense mathematically.

Why is that OP ? Dont forget during divorce all assets are counted and divided between you (maybe not 50/50 due to need). Are their other assets such as savings or pensions.