Q In 2006 I bought a house for £250,000 with an interest-only mortgage. I have made occasional overpayments so the outstanding loan is £200,000 (still interest-only). The value of the house is now £450,000. A friend paid the cash deposit of £10,000 as an investment when I bought the house. He has lived in the house since then and has been paying me £330 a month in rent. He now wants the money he invested back plus any gain he has made from the house going up in value. How do I work out what I owe him? I am not intending to sell the house.
MC
A When your friend invested £10,000 in your house back in 2006, his contribution to the purchase was 4% of the purchase price (10,000 divided by 250,000 times 100). So to work out what you owe him, you simply take 4% of its current value of £450,000 which means paying him £18,000. To be scrupulously fair to your friend, you might want to get an estate agent of his choice to value the property to ensure that he agrees what the house is worth and so what he can expect to get back.
