FAQ
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QUESTION

If 2 people decide to invest in a house, but only 1 of them wants to live in the house, should the interest only monthly mortgage payments be:

1. split 50/50,
2. the person living there pays 100%
3. the person living there pays 100% plus rent to the other owner
4. the person living there pays 50% plus rent to the other owner
5. or something else?

Basically, what would be standard to keep the shares equal, and which of the options would change share values?

EDIT- Further details:

Assume I move out, the house is on interest only mortgage payments, i.e. the mortgage is not being paid off, only the interest is being paid off. Assuming the mortgage is 600pm and the rent for the whole house is 700pm. If I moved out, does that mean I pay 300pm towards the mortgage, I receive 350pm for rent, and I don't pay any bills for the house as I am not living in there.

ANSWER

To start out with, suppose you have three people: A and B own a house and rent it out to a third person C. In this case C pays rent and A and B each receive or pay (rent - mortgage) / 2, depending on whether the rent covers the mortgage.

Your situation is identical, except that B and C are the same person. So the person not living in the house receives or pays (rent - mortgage) / 2 and the person living in the house covers the remainder.

I hope you can agree on a reasonable rent. :)

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