[b]andyl[/b] wrote:
If the sister wanted more then she should have been contributing to the mortgage instead of lumping your GF with it.
and as keeps being pointed out, she also lumped the GF with the benefits of living in the house - it's for that benefit that people tend to pay mortgages and not pay them when they don't live somewhere.
[b]BoardinBob[/b] wrote:
Let’s say the mortgage is £500 a month. Over the 10 year period the sister would have contributed £3000 and my girlfriend has paid £57,000.
That alone is enough to rule out a 50/50 split
No, it's not, because you're ignoring the benefit she's got from living in the house. Unless you think she should effectively have been living there for free subsidised by dad's deposit?
Tell her she can have half of the equity on receipt of payment of the nine years’ worth of mortgage repayments she’s failed to make on the flat she part-owns.
And then charge the girlfriend 50% of the rent for the property. That should work out around exactly the same.
Why didn’t they get her name taken off the deeds when she moved out?
Presumably because the GF wasn't prepared to cough up £20K to compensate the sister for her half of the Dad's gift at the time?
Genisiscore502011 is correct. Whatever is left from the sale, give it back to pops.
My position is a good chunk of the initial £40k deposit is immediately wiped out by the decline in value of the property. £20k of it is immediately written off so that leaves £20k to split. That should then be weighted by contribution over the years in terms of not only the mortgage but council tax, insurance, factors bills, upkeep and decoration etc
Either way it's a bloody mess and should probably have been agreed in advance about what would happen when this issue arose, but folk never seem to consider these things at the time. As I said, I have no financial interest at all. I have my own place, I'm sorted financially etc so none of this money will ever come my way.
Oh, and,
Surely the 40k deposit is misleading here? They have a £105k mortgage between them, the flat is worth £125 so for all practical purposes it's actually appreciated in value by £20k as far as they're concerned.
<span style="color: #444444; font-size: 12px; background-color: #eeeeee;">If the mortgage was £500 a month it should have cleared a lot, lot more than £16,000 off the mortgage balance over 10 years</span>
A thirty year mortgage...
<span style="color: #444444; font-size: 12px;">Surely the 40k deposit is misleading here? They have a £105k mortgage between them, the flat is worth £125 so for all practical purposes it’s actually appreciated in value by £20k as far as they’re concerned.</span>
Good point
Ach, I'm staying out of it. It'll be world war three at some point. The lot of them fall out at the drop of a hat so I'm going to keep schtum
There's arguments both ways but 50% does seem the simplest and they both come out ahead in what could've been a very bad investment. Just make that 50% once all costs are taken into account
Oh, and, and,
Whatever you do decide to pay her (based on what I said earlier 10K seems fair), make sure it's enough to cut the grubbing cow out of your life. She sounds toxic, family or no.
My position is a good chunk of the initial £40k deposit is immediately wiped out by the decline in value of the property.
Why would you take the decline in value out of the deposit only, the decline in value is over the whole £145k, not just the £40k. Not sure how you could think that rule could apply.
[b]P-Jay[/b] wrote:
By following the calculation I suggested she gets just that – she invested £20k of her Dads money into half a flat worth £145k It’s now worth £125k, she lost £10k.
She invested £20k of dad's money for a 20/145 share of the value of the flat - not of the equity of the flat. If the flat is now worth £125k then that share is now worth 20/145 x 125 = £17,241.38. The only way she could have lost half that investment is if the flat is now worth £72,500
I doubt legally she could argue 50% of equity, it would be akin to divorce, she’d never get 50% through arbitration.
No, but I'm sure she could legally argue a 20/145 share of the total value of the flat.
using the MSE calculator, £105k for 35 years at 4.5% gives £89k remaining after 10 years and monthly payment of £497. (totally guessing at interest and term here)
That is a total of £59,640 over 10 years. Of which £16k was capital so £43,640 in interest.
So interest averages out at £363 per month effectively for "rent" that your Gf has been paying so not a staggeringly low figure but probably lower than she would have spent on rent unless sharing which she may well have done instead of buying for the sister to then pull out.
Real question is - how far is your girlfriend prepared to go to get what she feels is right? Get solicitors involved and they could both kiss goodbye to any money.
FWIW, in the 9 years since the sister last lived there and contributed anything, she's been living mortgage free with her partner as he bought their house for cash with an inheritance.
[b]BoardinBob[/b] wrote:
FWIW, in the 9 years since the sister last lived there and contributed anything, she’s been living mortgage free with her partner as he bought their house for cash with an inheritance.
Which is also completely irrelevant - though if it had any relevance at all, I presume the sister has no financial interest in the house she currently lives in.
she’s been living mortgage free with her partner as he bought their house for cash with an inheritance.
That's of absolutely no relevance. Apart from the fact that your girlfriend benefited by having the flat to herself.
The consensus seems to be 50/50 so maybe 10k to put it to bed isn't the worst deal and probably not worth fighting too much about!
<span style="color: #444444; font-size: 12px;">I presume the sister has no financial interest in the house she currently lives in.</span>
No, she's on the deeds for 50/50...
30 year mortgage would be at 6.5% for £89k left after 10 years which seems a bit high but when I remortgaged back then I was paying £600 a month in interest on a £130k mortgage. thankfully that dropped to a variable at 1.5% above base when the everything went belly up as I was a student with 3 part time jobs to pay my mortgage and the drop from £600 to £180 a month interest was the only thing that kept my head above water.
Those figures would give a mortgage of £664 a month so £79,680 total so £530 a month interest on average over the 10 years. I would say that would probably easily cover the rent of a £125-145k property.
50/50 shares in two seperate houses for paying half a mortgage for a year?
Lucky girl.
If the sister is happy to get £10k then she's daft, and your girlfriend has done very well out of it.
[b]BoardinBob[/b] wrote:
No, she’s on the deeds for 50/50…
😮 - how did she wangle that when he paid for it all? I wouldn't personally have done that (see upthread for my situation, though in my case my inheritance paid for far less than half the cost of the house so it's rather different).
the sisters living situation is irrelevant but it's good to know if she comes back with the argument "but you have had cheap rent for 10 years..." as your Gf can throw it back in her face that she has had no rent for 9 years!
<p style="padding: 0px; border: 0px; outline: 0px; font-size: 16px; vertical-align: baseline; background: #eeeeee; line-height: 1.2em; color: #444444; margin: 1rem 0px !important;">50/50 shares in two seperate houses for paying half a mortgage for a year?</p>
<p style="padding: 0px; border: 0px; outline: 0px; font-size: 16px; vertical-align: baseline; background: #eeeeee; line-height: 1.2em; color: #444444; margin: 1rem 0px !important;">Lucky girl.</p>
And probably a brand new £50k Mercedes on lease (insert rolleyes)
<span style="color: #444444; font-size: 12px; background-color: #eeeeee;"> – how did she wangle that when he paid for it all? I wouldn’t personally have done that (see upthread for my situation, though in my case my inheritance paid for far less than half the cost of the house so it’s rather different).</span>
It's fair to say there's a catalogue of errors along the way here. Nothing in writing, 30 year mortgage!!!, lack of clarity over anything, blagging her way onto the deeds for a property with no mortgage etc.
[b]Gary_M[/b] wrote:
If the sister is happy to get £10k then she’s daft, and your girlfriend has done very well out of it.
+1 - if sister will take that I'd snatch her hand off. I note it's only what your g/f is suggesting offering though, and if sister is as money grabbing as suggested I'd be surprised if she does settle for that (if that's the outcome you want I suggest making a very careful argument for that case being more than generous).
No idea how I did the big smiley but it's apt 😆
blimey - I read the OP's description and thought it would be easy, but from the discussion it's clearly not.
Seems to be all down to where you consider the losses should be covered
- by the initial investment?
- by the payments being made on the mortgage?... and then on top of it how to you cover the idea of "rent" for one sister living in the house, and one not.
I have to admit, I'm struggling with how to deal with it, and with the OP the best of luck that it goes smoothly for the sisters and he gets lives a happy stress free life.
Invite sister round for dinner, install a new patio. Sell house.
I'm quite liking one of the suggestions above.
Remove the father's contribution from the equation and essentially they had a mortgage for £105k
The property is now worth £125k so split 50/50 they are due £10k each from that element alone
In addition the mortgage is £89k so there's an additional £16k to be split (£105k-£89k)
Going on the basis of the mortgage contributions over the years (and I'm just using £500 as a rough guide, I don't know the exact figure or how it's fluctuated) then the sister has contributed 5% of the total mortgage payments over the 10 years so she should get 5% of the £16k which is £800 so in total the sister gets £10,800.
THEN, if either one wants to give some money back to their father then that's a separate discussion they should have with him.
"as a percentage of original vulvae" [insert shocked smiley]
So that'll be half each, I presume?
I'm reminded of some friends divorce settlement, they had got everything settled apart from last £10k, friends told them to split and give £5k to each of their kids - but oh no they spent £8k arguing about it.
The one who paid the mortgage received benefit of living in the place so just split 50/50 after selling costs, the conveyancing solicitors will be duty bound to follow this route unless instructed by both parties to do otherwise anyway.
& Yes I am expecting to be in a not dissimilar situation later this year 😕
Looks like the max you want the sister to get, even though you're staying out of it, is £10k.
It's not the fairest deal, as your refusing to accept the fact that your girlfriend benefited from living in the property for 9 years, but if the sister accepts it then happy days.
I’m reminded of some friends divorce settlement, they had got everything settled apart from last £10k, friends told them to split and give £5k to each of their kids – but oh no they spent £8k arguing about it.
My sister's in a similar battle, I had to lend her £10k so she could pay a barrister to fight for er £10k. It's all about winning though it would seem.
<span style="color: #444444; font-size: 12px;">It’s not the fairest deal, as your refusing to accept the fact that your girlfriend benefited from living in the property for 9 years, but if the sister accepts it then happy days.</span>
I get the living there benefit but consider this.
Total mortgage payments since day 1 total £60k (for illustration) and the sister has contributed £3k of that
As long as the sister gets more than £3k back then she's gained from the situation whereas my girlfriend would only gain (financially) is if she got back more than the £57k she's paid towards the mortgage so yes she did benefit but it wasn't free!
Worst case is 50/50 of the end which is £18k each (minus selling costs) so the GF loses £7200 compared to the best case for her. that is small change when dealing with houses, and thats before you have one that has dropped in value.
9 years rent free is quite a benefit.... 🤔
<span style="color: #444444; font-size: 16px;">It’s not the fairest deal, as your refusing to accept the fact that your girlfriend benefited from living in the property for 9 years, but if the sister accepts it then happy days.</span>
But the GF also paid a lot of mortgage interest in those 9 years which, depending on interest rates could have easily been the same a similar rental but with all the risks of property repairs etc.
Total mortgage payments since day 1 total £60k (for illustration) and the sister has contributed £3k of that
But that would be what you girlfriend would be paying had she lived in a rented flat.
<span style="color: #444444; font-size: 16px; background-color: #eeeeee;">9 years rent free is quite a benefit…. </span>
Yes, the sister has had 9 years rent free living with the new fella!
the GF hasnt as she has been paying the mortgage interest.
It’s not the fairest deal, as your refusing to accept the fact that your girlfriend benefited from living in the property for 9 years
I'm not really seeing how that's relevant. She's been paying to live there for ten years, paying all the bills, repairs and maintenance.
"<span style="color: #444444; font-size: 12px;">She invested £20k of dad’s money for a 20/145 share of the value of the flat – not of the equity of the flat. If the flat is now worth £125k then that share is now worth 20/145 x 125 = £17,241.38. The only way she could have lost half that investment is if the flat is now worth £72,500"</span>
Sorry, I can't agree. You don't get to invest in property with borrowed money, not pay a penny of interest in 9 years and then have it all it back minus the depreciation - not to mention it wasn't even her money in the first place.
I mean, the flat's lost £20k in 10 years, the GF has had to cover the payments, maintain the place (admittedly living there too) and Sister takes £700 less, nah.
Look at it another way - say Dad didn't help out and they got one of those 100% mortgages that were available in 2007. Even forgetting the much larger repayments - they'd currently be about £5k in negative equity - does calling up sister and saying "remember the flat you left 9 years ago? Yeah I want £2500 off you so I can get rid". seem fair?
Legally - all the sister has to do is sit back and let the 50% after costs roll in, anything less will be an uphill unwinnable battle.
The fact that the sister has been paying no rent is irrelevant.
But that would be what you girlfriend would be paying had she lived in a rented flat.
So? She wasn't, she was paying a mortgage.
I think you could come up with calculations, and "reasonable" justification, to support any amount.
The sister could reasonably argue that she'd effectively loaned your gf £20k, and expects that back + interest.
Half the equity doesn't really seem too unreasonable. I mean, I see how it seems unfair, but the sister could have asked to be bought out when she stopped living there, so your gf has benefited.