Partner disputes mortgage profit split

[olivia12]

Hello, I would like some advice regarding my tenants in common joint house purchase. My partner and I bought a property 6 years ago. He paid 100K deposit, I paid 5K deposit.

All mortgage payments/bills/maintenance are split 50/50.
We agreed to sign a deed of trust that in the event of us selling the house before our mortgage is paid off, we would each get our deposit back, pay the remaining mortgage, and any profits would be split 50/50.

He was happy with this at the time, but for the past two years he occasionally brings it up, saying it’s unfair and he should get more profit in case we split.

I know legally he has agreed and signed the trust, but the fact he keeps bringing it up at every argument, and feels very resentful, it’s starting to affect our relationship. If he had wanted a proportional split, I think our mortgage payments should have reflected this, but I’ve always paid 50/50.

I have been to a solicitor that also agrees with me, but I am not sure that my partner will ever see it that way, even though at first he did!

Any advice? Should this be in the relationship forum?

Thank you

Because they didn't put in 50% of the original capital.

They should, of course, be entitled to 50% of the profits on the part they bought together.

Are you telling me I was as well of having put in £200k deposit alongside £20K deposit and then splitting ALL the equity once our cash amounts of £200k and £20k were repaid?

Because I know I would have been much better off had I either invested my excess £180k elsewhere for nearly 20 years, OR had a % share of the ownership that fairly represented the initial deposit and the mortgage payments.

Mortgage repayments are mostly interest unless you're overpaying. Totally irrelevant to the appreciate of the asset apart from the fact you wouldn't have it without the mortgage

The thing is that the deed of trust is what the two of you agreed between you. Of course there's more than one way of doing the maths.

If A puts down £100k and B puts down £5k and together they buy a £300k house with a £195k mortgage then one option is to say that A owns 33.33% of the house outright and B owns 1.67% of the house outright and the remainder less paying off outstanding mortgage is split 50:50. another option is to say that A owns £100k of value outright and B owns £5k of value outright and the remainder less paying off outstanding mortgage is split 50:50. If they sell for £360k having reduced the mortgage outstanding to £150,000 then under option 1 person A gets £162,000 and person B gets £48,000. Under option 2 person A gets £152,500 and person B gets £57,500.

either way is a valid way to do it, what's important is that you decide in advance so that if needed you have an agreement to stick to and don't need an argument.

They should, of course, be entitled to 50% of the profits on the part they bought together.

And that is what I’m saying, they should be entitled to 50% of the profits of the part they bought together together

You’ve not given enough information to allow someone to calculate what is fair based upon the comparative size of their contributions (deposit and mortgage) - excluding the other items in my previous post.

It’s a simple calculation, just put the figures in a spreadsheet and you’ll see what is considered “fair” based on relative contributions.

??

it's not ridiculous logic at all. He's getting no return on his significantly higher deposit, if he'd put this in a saving account instead he would be. He has significantly reduced their mortgage by investing in the house, why shouldn't he benefit from that?

@olivia12 see above BUT, I would have this conversation once, come to an agreement & expect not to hear it ever again.

He's obviously unhappy with your current arrangement & you need to deal with that properly.

Maybe at that time he didn't think about how much he would be losing on his investment compared to putting it into a savings account & now he has & it's making him unhappy.

it's fair to reflect on things & ask to change them when you realise how unreasonable they are.

if neither of them foresee them splitting up the op has nothing to lose by adjusting the agreement & he feels less resentment. If they (or one of them ) do see them splitting up, it's unreasonable of her not to accept he's missing out on the money he'd have got if he'd invested his money in a savings account instead of saving them money by reducing their mortgage, because she's being grabby & he didn't sufficiently think it through before agreeing to the unreasonable agreement.

so if the house was 200k with a 100k mortgage
he 95k dep 50k mortgage he’s stake 145k
op 5 k dep 50k mortgage OP stake 55k
in % OP share is 28% his 72% that is how profit should be split

the guys fool he could of put 5k down like op invested 90k the income of that would of matched mortgage payments and OP would have ended up paying more or less double the mortgage and then she could have 50% of profit

So 50% of 80%? Is that what you mean?

I mean let’s say the amount is £400k equity, he gets his £100k and OP gets her £5k so there is £295k left. They then get £147.5k each. So he gets £247.5k OP gets £152.5k

50% of the profits of the part they bought together would be 50% of the profits of 80% of the house (the part they bought together). So Op would get 40% overall of the official profits of the sale as she was only involved in buying 80% of the house.

Your partner is right. Any individual deposit input into a property should be expressed as a percentage rather than a fixed amount. Then the equity uplift is split equally. But if this wasn't done at the time of agreement then it's a sticky point.

Sorry, forgot to quote you, read a few msgs above.

Op, it's as simple as if you and partner put £100 + £5 into a savings account. Would you think it fair to split the interest evenly?

Thank you. This does make it simple. I don’t want the interest on his £100, I just want the interest of the £5 plus half of the interest of the mortgaged part, for which I have contributed equally.

I think we can rewrite a new deed that would be fairer for both and then hopefully no more arguments.

Thank you all for your contributions, I feel a lot more clearer and able to understand his point of view better.

Don't do this without getting the legal documents updated to safeguard it.

He has a point. If you had both invested the money rather than buy a house he would have gained far more than an equal share in the return. He was foolish to agree to this arrangement in the first place
I think you both should consider getting independent advice about a fairer agreement or it will continue to eat away at your relationship like it is at the moment.

If the OP was married and then divorced after a long marriage the house would be a marital asset for consideration along with pensions and savings in either person's name.

Our tenants in common trust is on percentage and not deposit

Yes the house would be, but there is no one size fits all as to how the equity in the house would be shared out between them after their basic needs are met.

I think it’s perfectly fair in what you’re proposing 👌🏻👏🏻

should the event arise! He gets his £100k deposit, you get the 5k & whatever equity is left, should be split 50/50!!

I don’t understand why people would assume it’s unfair?? Regardless of the deposits (which would be returned to each of you) neither of you would be out of pocket & the remaining equity split equally based on 50/50 mortgage repayments, home improvements, bills etc. Now that is simply fair to both.

I would suggest, if he feels strongly that it’s unfair, he could propose what he would feel is fair?? Ie 70 -30% split? & if that’s something he feels would be fair & justified, then I would only agree based on you only contributing the 30% & taking into account the 6 years of your contributions!!

I'm sure that may help him change his tune!

However, I also agree, why the sudden fixation on the funds of your joint home?

Good Luck OP as I sense there could be more to his fixations than he’s letting on. Possibly 🤔🤷🏽‍♀️🫶🏼 or maybe he’s overly concerned with money in general? 🤷🏽‍♀️

Is he generous by nature or financially motivated? 🤔

He’s right. It’s not fair.

In the scenario you’ve described with the house worth 570k, you receive 102.5 and he receives 197.5. He’d grudge you that? You say he took advice, so he can’t just change his mind. He signed a legal agreement. Do not agree to any change Without legal advice because there’s a very strong chance he’ll announce that he wants to separate. Can you afford to rehouse yourself with under 100k deposit? If you were married theres a good chance the profit and deposit would be split.

I think writing a new deed would be very fair and prevent a very nasty break up (may be still a break up, but a much more amicable one) and that is a huge benefit to both of you.

Back of fag packet calculations:

1. You bought the house for £445k 2a) Deposit paid £105k 2b) The mortgage value was £340k after deposits
2. Amount left on the mortgage now is £270k
3. That means you have paid of £70k off the value of the house, or £35k each
4. His investment: £135k, your investment £40k. Total investment £175k 6a) His share of the investment is 135/175 = 77% 6b) Your share of the investment is 45/175 = 27%
5. Therefore when the house sells that should be the share of the profit you each receive

NOTE: The more mortgage you pay now, the better the percentage will be in your favour, so you'll need to redo this calculation based on a proper valuation of the mortgage when you come to put the house up for sale.

my son put down around 100k
his partner 0
my sons deposit is protected in that he gets that back but they are sharing any equity 50 -50 and they are on the deeds as joint tenants

but my son couldn’t get the house without his partners wages as despite having a big deposit he didn’t earn enough

his partner paid all the legal fees and moving costs