House Investment Question
Discussion
Good evening, I’m after a some unbiased opinions on a situation involving some money and my sister.
6 years ago my sister and I inherited £30,000 each. I had no real need for that kind of money at the time, where as my sister decided to buy a house. She asked if I wanted to put my £30k into the house, which I did. My mum also put £30k in. My sister then borrowed £30k on a mortgage and purchased a £120,000 property.
We signed an agreement that when I wanted the money out, my share would be quarter whatever the houses market value is at the time. We also agreed verbally that my sister would pay me a monthly sum of the mortgage saving that my £30k equated to. However I only received £50 on 3 occasions.
6 years later and its my chance to buy a house. As house prices have dropped my £30k is now only worth £27k. I realised this may be the case but thought my sister would take into consideration the money she has saved on her mortgage and pay me back closer to what I gave her in the first place.
There are other things involved such as her now husband moving in and them now moving into his house that he was renting (they’re going to rent her house now). Plus things in her favour such as decorating the house which has improved it although not to any great standard!
So opinions please? If push comes to shove, I will except the £27k and family life will go on as normal. I’d just like to know what everyone's thoughts are.
6 years ago my sister and I inherited £30,000 each. I had no real need for that kind of money at the time, where as my sister decided to buy a house. She asked if I wanted to put my £30k into the house, which I did. My mum also put £30k in. My sister then borrowed £30k on a mortgage and purchased a £120,000 property.
We signed an agreement that when I wanted the money out, my share would be quarter whatever the houses market value is at the time. We also agreed verbally that my sister would pay me a monthly sum of the mortgage saving that my £30k equated to. However I only received £50 on 3 occasions.
6 years later and its my chance to buy a house. As house prices have dropped my £30k is now only worth £27k. I realised this may be the case but thought my sister would take into consideration the money she has saved on her mortgage and pay me back closer to what I gave her in the first place.
There are other things involved such as her now husband moving in and them now moving into his house that he was renting (they’re going to rent her house now). Plus things in her favour such as decorating the house which has improved it although not to any great standard!
So opinions please? If push comes to shove, I will except the £27k and family life will go on as normal. I’d just like to know what everyone's thoughts are.
otherman said:
I don't see where the mortgage saving comes from. Your sister borrowed 30k and she's been paying interest on 30k. You bought a quarter of a house and your getting back a quarter of a house. You're getting your exact value aren't you?
Yes but the sister has 'gained' by not having to borrow the extra £30k that her brother has given her. Therefore if she hadn't had her brothers £30k her monthly payments would have been higher than they have been.OP, you've shot yourself in the foot by not enforcing your agreement of her to pay you monthly from the outset.
Make sure you get some independant valuations too
You've lost about 5k in inflation in that period as well as the interest payments so you're probably about 6 or 7 thousand down on that deal.
The other way to look at it is to think about the fun you could have had in a nice car in that time...
Alternatively maybe given the economic climate of the last few years maybe you might sigh in relief that you could have put the lot on nice safe and trustworthy Barclays shares. You'd have 8 grand left now. Or even better Lloyds - You'd have enough for a big weekend in london left...
Family and money...
The other way to look at it is to think about the fun you could have had in a nice car in that time...
Alternatively maybe given the economic climate of the last few years maybe you might sigh in relief that you could have put the lot on nice safe and trustworthy Barclays shares. You'd have 8 grand left now. Or even better Lloyds - You'd have enough for a big weekend in london left...
Family and money...
As above, time to pucker up and put it down to experience unfortunately.
Where you went wrong (not that this helps you now, but you never know, there might be a next time) was not separating out ownership and usage right at the beginning. You did the ownership fine, but then you really needed a usage contract where your sister would pay an agreed monthly 'rent' to the owners including the mortgagor, who would share it in proportion. She would in effect pay herself an amount.
Is the 50 the right monthly amount ? So you'd have to ask her for a lump sum of around 3.5k ? Only you can judge how well that will go down in the family.
Where you went wrong (not that this helps you now, but you never know, there might be a next time) was not separating out ownership and usage right at the beginning. You did the ownership fine, but then you really needed a usage contract where your sister would pay an agreed monthly 'rent' to the owners including the mortgagor, who would share it in proportion. She would in effect pay herself an amount.
Is the 50 the right monthly amount ? So you'd have to ask her for a lump sum of around 3.5k ? Only you can judge how well that will go down in the family.
Perhaps a bit late to chase up a old unenforced agreement, probably result in I'll feelings in the family.
I guess you didn't pay for the upkeep maintenance & insurance of your quarter of the house ? Equally any legal fess in buying and if a sale did have to be made any estate agent/ legal fees ?
10% loss on a property investment (after all costs etc) over the last 6 years is probably a fair result (outside London)
I guess you didn't pay for the upkeep maintenance & insurance of your quarter of the house ? Equally any legal fess in buying and if a sale did have to be made any estate agent/ legal fees ?
10% loss on a property investment (after all costs etc) over the last 6 years is probably a fair result (outside London)
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