Bought a house with family members, now I want out

Hi,
I bought a house 2 years ago (at the height of house prices) with 2 family members. Now I want out of the house and the mortgage but I don't know whats a fair deal.
We put down 10,000 deposit between us and have bought all the furniture, kitchen appliances and garden stuff between us. We all get on well and want to make sure everyone gets a fair deal out of it but we are not sure whats best. I am happy to leave everything we bought in the house for them to use, but am not sure what to do about our deposit.

Obviously we are in negative equity right now but the other 2 would want to live in the house for at least the next 5 years.
Please help..?
Cheers

What did you say in the agreement you wrote when you bought the house together?

Even if you had an agreement, I doubt it covers a negative equity situation (mine doesnt).

Pollyhops, I think you are going to have to buy your way out due to the -ve equity. Can you give more details? house cost, current mortgage, realistic current value?

If you are in negative equity then you owe them money if you want to get out of it. Put it this way if you 3 were to sell,

You equally put in say

Deposit 10000
Furniture 10000
House mortgage is 200000
House is worth 150000
Negative equity is 50000 - you owe 1/3 of that and you get 1/3 of the value of the furniture, the deposit is gone.

Thks for giving me some clarity on this.
We never had an agreement mentioning negative equity.

The house cost 350,000
Now worth about 300,000
Furniture 10,000
Deposit 10,000

If I want to go now, I guess I have to pay up, cut my losses and run.

Thks for putting it down to basics, I couldn't think clearly as its family and as I said none of us wanted to screw the other one over!

You will also need your two siblings to investigate whether they will be able to get a mortgage without your earnings being considered for affordability. If they can not get a mortgage for the amount required you may not be able to get out. If the house needs to be revalued and they need to get a new mortgage, it may be based on a loan to value based on current market conditions. If this was the case there may need to be a cash injection.

Also there will be costs involved for solicitors, valuer, possible bank fees to have you removed from the mortgage / deeds. You will need to consider who pays for this although your agreement probably covers that.

OP it is not the house cost that matters but what is remaining on the mortgage.

ontour said:

You will also need your two siblings to investigate whether they will be able to get a mortgage without your earnings being considered for affordability. If they can not get a mortgage for the amount required you may not be able to get out. If the house needs to be revalued and they need to get a new mortgage, it may be based on a loan to value based on current market conditions. If this was the case there may need to be a cash injection.

Also there will be costs involved for solicitors, valuer, possible bank fees to have you removed from the mortgage / deeds. You will need to consider who pays for this although your agreement probably covers that.

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Thks ontour, as a first time buyer/seller theres so much I hadn't thought of...cheers for this!!

Pollyhops.. all the responses are correct,,,why do you want out? Why not weather the storm? it is a lot of money and hassle to pay out now just to get off the mortgage

chlipps said:

Pollyhops.. all the responses are correct,,,why do you want out? Why not weather the storm? it is a lot of money and hassle to pay out now just to get off the mortgage

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Yeah, I am beginning to agree with you having done some further research.
I want out because I am moving to another country so thought it the easiest and cleanest thing to do. Not so sure anymore.

Seeing that you now know approx cost implication, i think it is best that you discuss the issue with your family and decide as a group what the best way forward is...Important with family investments that this does not cause internal turmoil.. Remember at the end of the day its only land

Make sure you exit the asset at its LTEV (long term economic value). This is now established as the industry standard practice.

pollyhops said:

I want out because I am moving to another country so thought it the easiest and cleanest thing to do.

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It is indeed the easiest and cleanest thing to do even if it costs you financially. Make the break if you can.

It seems it will cost all three of you money if you were to pull out now. As you are leaving the country, might it be an option for you to keep your name on the deeds but your two siblings get a lodger in to cover your portion of the mortgage? At some point in the future, if the market has improved, you could look again at selling.