If my boyfriend puts more of a deposit into that house should he get more of the profit also?

Question

I have less of a deposit, but i also earn a lot less. We will be paying the same towards the mortgage. He thinks he should get more on top of his original deposit if we sell, I don't agree

I don't think I should get more back. I agree we should both get our original deposits back and then split the profit equally. What if I pay for a bathroom or kitchen, how is that taken into accout?

He is putting down 10k more than me, it's not a lot

Answer 1

You should make up a contract specifying all the details so there is no dispute if there is a profit.

I would have keep a list of all funds paid, principal, interest, repairs, insurance, taxes, who paid what, and go by that.

Who gets the tax credits on the interest paid?

It is not a good idea to buy a house with a boyfriend, but if you do, have a lawyer draw up a contract for you.

Answer 2

I would keep the deposit/profit sides separate.

It is only fair that if he is putting more of a deposit down now, he should be able to recoup his deposit when the house is sold. But when it comes to pay the mortgage and maintain the house, you are payng equal? He may earn more, and therefore think he's entitled to a bigger share of the "beneficial interest" when its sold, but by the same token (and not wanting to sound sexist) you may put more into keeping the house - cleaning and decorating wise?

It is a sad state of our society that people go into such commitments as buying a house as a couple with an eye to what can go wrong in the future. To me, if you are committed to buying a house together you should only be doing this with someone you are comfortable that you will stay with. Surely this is bigger than getting married?

If he wants to protect his investment should the worst come to the worst, create a Trust Deed with the help of a lawyer to protect his additional £10k. That way his additional spend is repaid.

To get into minutiae of an entitlement to a larger share of the equity seems petty, but this may depend on how big your joint deposit is. It would appear that the calculation of his additional interest is a complicated one if you are sharing the cost of the mortgage. At the moment if th house were (God forbid) sold at shortfall, you would both be liable for the whole debt (unless he indemnifies you for any additional loss you suffered, which is the flip-side of his argument). I doubt if he would do that.

If he won't move on this, maybe you should be concerned about his commitment, or confidence in your relationship, in which case I would consider acceding to his wishes and just look upon this as an investment opportunity, which you otherwise would not have? Sounds like that may be an angle he is looking at?

You should be buying a house because you want to live together. As someone else says, arguing over money is a slippery slope to a breakdown of a relationship.

What you both have to decide is what is more important - each other, or £?

Answer 3

Why not just keep the deposit amount a separate entity? I agree with him -- if there is a sale of the property, you should each get the amount you gave as a deposit returned first. After that, if you have contributed equally to the mortgage, any profit upon a sale of the property should be split equally. I understand that you earn less than him and it's unfortunate that your boyfriend feels the way that he does about the deposit -- but that's how he feels! On one level, I truly agree with him -- I think it is prudent to lay out his expectation the way he is. Think about it -- you are not married; if your relationship falls apart sometime in the future, this will be one issue that is already cut in stone. I admire his candid and forthright approach--even if it does bruise you a little, he is being totally realistic! One would only have to watch a few of the stupid court shows on television to know that putting all your cards on the table at the beginning is the way to go. I'm sorry if your feelings are hurt, but he's right. Don't let this be a deal breaker -- his prudence may make him more of a keeper in the end!

Answer 4

pjshacks is absolutely right. Each deposit buys a share of the profit (or loss) for that person, and the profit/loss from the mortgaged share of the house should be split 50/50.

To give another example:
He puts in £30,000, you put in £20,000, mortgage is £100,000, total £150,000. You then sell for £180,000 which is 20% gain. So his return on deposit is £36,000 (20% increase), you get £24,000 (again up 20%) back from your deposit. Out of the remaining £120,000 nearly £100,000 is used to repay mortgage, leaving £20,000 that you split evenly.

So whatever percentage change happens to house value gets applied to your deposits, and then you split the remaining money 50/50 after clearing the mortgage.

Answer 5

You could do it one of 2 ways...you could look at it in terms of percentages (which it sounds like he is doing...), if you put down $20k and he is putting down $30k then your percentage of the profits would be 40% and his percentage would be 60% (so if you sold the house and made $100k then you would get $40k and he would get $60k)

The other option is that he would get his extra $10k back and you split what is left equally (so if you made $100k you would get $45k and he would get $55k)

Personally I think the second option is better if you are each going to be splitting the payments equally. Is this a house you are buying to flip or your primary residence? I suggest you keeping a very close track of what each of you are putting into the house (ie, I paid $10k to redo the bathroom, he paid $15k to re do the kitchen, ect)...this way you can each get back what you put in with no arguments...then you split the profits 50/50.

Also I would have a written contract drawn up before you two enter into this house...you are not married and thus are not protected under a divorce decree if you should break up...this could lead to credit disasters for both of you if you don't have a contract prior to purchasing the house. Once the house is purchased in both of your names, if you break up you cannot get his name or he cannot get your name off the house without refinancing the house.

Answer 6

Don't buy the house. You already see problems. That is just the tip of the iceberg. If you do buy the house, he should get his share of any extra he paid. As for any upgrades, 50/50 should be the cost to each, 50/50 profit when selling.

But you are asking for a disaster. You should not buy a house with boy/girl friend.

How about one of you buy the house and the other pay rent of half the cost. That way noone has any misunderstanding about anything.

Good Luck

Answer 7

I would say that if you ever split, you should remove the original deposit values from the profit and then spilt the remainder. After all, you'll be paying equal amounts once the house is bought so why should he get a larger percentage ? If you were to pay in the larger amount, I'm sure he would be reluctant to give you the larger profit share !

Answer 8

Imagine the property you own is worth £100,000.
If your boyfriend puts in £15,000 deposit and you put in £5,000, the remainder on the mortgage will be £80,000.
The £80,000 is split equally between you both as you pay equal amounts. In essence, in this case, your part of the property will be worth £45,000 (45%) and old loverboy £55,000 (55%). You could fill in your own figures to get to the right splits but by the sounds of things he should get slightly more than you - it all depends upon the initial deposit.

Answer 9

A house that you are living in is a mutual investment. There is no accurate way to keep track of whose portion is whose. Therefore, you should consider it 50/50. If you lose money on the house, then would you take less of the loss?

With that being said, I personally believe that buying a house with your boyfriend is generally a bad idea, unless you have a life-long commitment with each other, you should avoid making purchases like this. It spells financial disaster should a break-up occur.

Answer 10

Business is business. Think from his point of view. He is making a big commitment purchasing a house with a girlfriend. So obviously, finances should still be seperate.

If you put in $25, your boyfriend $5, and the investment paid out at $450; you would most definastely like a larger chunk of the investment.

If you can't handle the way your bf is thinking, I would suggest that you reinvest in t-bonds or some other investment.

Just my thoughts and I mean you no ill-will.

Vaya Con Dios