House purchase with a common law partner - Down payment & House equity split?
A close friend has asked me this question today, and I am not sure what the right answer should be.
He owns a 2-bedroom downtown condo in Toronto (FMV about $1M). His partner is paying him $1600 rent a month for the 2nd bedroom. With Covid, they have moved to another city working remotely for past 12 months. Now, his partner has found a better job in the new city, and they want to buy a $1.1M house there. My friend has yet to see if he can continue working remotely, or needs to find a job in the new city.
Although his partner has about the same salary income as my friend, his partner has little or no savings, which means my friend has to fund the new house 20% down payment entirely thru the Toronto condo refinance, or sell the condo, and/or liquidate his Tax Free Savings Account and his RRSP account. So, if my friend contributes 100% down payment towards the new house:
1) What % interest on the house title be recorded under tenant in common (as distinct from joint tenant)?
2) What % the monthly mortgage payment be shared between them?
3) His partner has proposed that, with my friend's 20% down payment (about $220k) towards the house, he is willing to have 40% interest on the house title. Is that fair?
4) If my friend and his partner splits one year later, I assume that his partner will get 40% of the house equity?
Thanks.
He owns a 2-bedroom downtown condo in Toronto (FMV about $1M). His partner is paying him $1600 rent a month for the 2nd bedroom. With Covid, they have moved to another city working remotely for past 12 months. Now, his partner has found a better job in the new city, and they want to buy a $1.1M house there. My friend has yet to see if he can continue working remotely, or needs to find a job in the new city.
Although his partner has about the same salary income as my friend, his partner has little or no savings, which means my friend has to fund the new house 20% down payment entirely thru the Toronto condo refinance, or sell the condo, and/or liquidate his Tax Free Savings Account and his RRSP account. So, if my friend contributes 100% down payment towards the new house:
1) What % interest on the house title be recorded under tenant in common (as distinct from joint tenant)?
2) What % the monthly mortgage payment be shared between them?
3) His partner has proposed that, with my friend's 20% down payment (about $220k) towards the house, he is willing to have 40% interest on the house title. Is that fair?
4) If my friend and his partner splits one year later, I assume that his partner will get 40% of the house equity?
Thanks.