Politics1 min ago
Tenants in common
Hi,
My partner would like to invest some money in my house by helping to pay off some of my outstanding mortgage. However we don't know how to agree what share of the sale value she would get should we spilt up in future. How should we work this out?
Answers
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For more on marking an answer as the "Best Answer", please visit our FAQ.The easiest way would be to get a couple of valuations from estate agents (or agree a value between yourselves), then divide the amount she is paying off by the value of the house. The value of your outstanding mortgage would be irrelevant.
For example, if the house is worth �150k and she pays of �50k of your mortgage, she would own 50 / 150 = 33% of the property.
She should then get 33% of the sale price when you sell. Again, your mortgage balance is irrelevant.
If the above is unclear post the figures I'll work it out and you should see what's going on more easily with real figures.
Hammer, the mortgage left is relevant because presumably they will be living in the house and both paying the remaining balance. It is fair then that the partner should gain some equity from the remaining payments, otherwise it is effectively rent, which is fine if that's what's agreed of course.
In that case, you need to make two calculations.
1. As I suggested earlier to decide how much of the property she owns now.
2. She should be entitled to a proportion of the price movement between now and the future sale, based on the proportion of mortgage payment she makes going forwards.
For example, if the house is worth �200k today and she pays �50k off the mortgage, she owns a quarter of the property. If she also pays 50% of the mortgage payments monthly she should own 50% of the profits between now and the future sale. So if you sold in 5 years time for �300k, she should get:
(300k x 25%) + (100k x 50%) = 75k + 50k = 125k
Hang on a minute, that's what you said!!