Declaration of Trust and a changing share
Discussion
My wife and I are buying a house, having recently got married. I am putting forward the entire deposit and paying all of the associated fees with the purchase. We will be entering into a joint mortgage.
I'd like to protect my initial investment (as a share rather than a fixed amount), should the worst happen, but equally I would like us both to share in the benefits of owning the house and of course paying off the mortgage.
The problem is, that I need a Declaration of Trust to take into account all of the above.
To keep things simple, let's say that we are buying a £100k house, with a 20% deposit from me. If we sell the house on day one, I want to get that deposit back. In five years time, the house might be worth £150k, with us having paid an additional £20k in equity. In that case, I'd want to get my original share of equity, inflated by the proportion the house has gone up by, and also half of the equity that we have paid off. That would leave me with £40k (my original £20k, now worth £30k and £10k from the additional equity) and her with £10k.
With the mortgage paid off, I think we'd end up with 60% ownership for me and 40% ownership for her.
At the moment, I am thinking that the easiest thing to do at the point of a theoretical exit:
- Sell the house and pay all fees but not the mortgage
- Split the proceeds of the above 60 me 40 her
- Require us to pay off half whatever is remaining on the mortgage each
Would that work?
I'd like to protect my initial investment (as a share rather than a fixed amount), should the worst happen, but equally I would like us both to share in the benefits of owning the house and of course paying off the mortgage.
The problem is, that I need a Declaration of Trust to take into account all of the above.
To keep things simple, let's say that we are buying a £100k house, with a 20% deposit from me. If we sell the house on day one, I want to get that deposit back. In five years time, the house might be worth £150k, with us having paid an additional £20k in equity. In that case, I'd want to get my original share of equity, inflated by the proportion the house has gone up by, and also half of the equity that we have paid off. That would leave me with £40k (my original £20k, now worth £30k and £10k from the additional equity) and her with £10k.
With the mortgage paid off, I think we'd end up with 60% ownership for me and 40% ownership for her.
At the moment, I am thinking that the easiest thing to do at the point of a theoretical exit:
- Sell the house and pay all fees but not the mortgage
- Split the proceeds of the above 60 me 40 her
- Require us to pay off half whatever is remaining on the mortgage each
Would that work?
desolate said:
What's your solicitor advised in the event you have kids?
The idea is that I am maintaining the position that I had going into the marriage. I'm actually less worried about paying a greater share of the mortgage, or even all of it if we have kids. What I want to avoid is the (unlikely!) chance of things going wrong 12 months from now.I understand there are some points relating to inheritance, but we are miles from that now I think.
Gassing Station | Finance | Top of Page | What's New | My Stuff