Buy out sibling share of house without a mortgage

Discussion in 'Mortgages and buying and selling homes' started by McD1978, Feb 28, 2012.

  1. McD1978

    McD1978 Frequent Poster

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    44
    Hi All,

    Just looking for some advice on the following: My sister and I have recently inherited a house from a deceased relative. All the paperwork regarding the will is done and dusted and the house is now in our joint names. My sister would like to buy out my half of the house and I'm willing to sell it to her but we're both wondering if she actually needs to take out a mortgage at all. Can we get a legal agreement drawn up where by she pays me "x" amount of monthly instalments until she has paid me half the value of the house? This would save her a fortune on interest that she'd be charged from a bank if it was possible.

    Any advice welcome. Thanks.
     
  2. 44brendan

    44brendan Frequent Poster

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    No problem in doing this. You both should go to a solicitor and get a legal agreement drawn up.
     
  3. mf1

    mf1 Frequent Poster

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    Think about what you want to achieve:

    1. She owns it outright and you have no security?
    2. She owns it outright and you put a mortgage on the property?
    3. Ownerhip does not transfer until the full amount is paid?

    Would it not be cleaner if she borrowed money from someone else ( i.e. a bank), the house was transferred and you walked away with money in your pocket?

    mf
     
  4. McD1978

    McD1978 Frequent Poster

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    Thanks MF - this is what I'm thinking...
    Would need a legal document to be fairly bulletproof as I know an individuals circumstances can change over the course of paying a mortgage.
    What would happen if they can't make payments?
    What happens if they want to extend the terms of the repayments?

    In some circumstances, it may be better to have them get a mortgage from a bank... Difficult to know which way is best.
     
  5. 44brendan

    44brendan Frequent Poster

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    From your own perspective it is definitely advisable that your sister obtains a mortgage and pays you up-front for your share of the property. The only rationale for an alternative proposal, is that you are anxious to help out your sibling and/or she is unable to get mortgage approval.
    based on your 2nd post the best advice at this time is for her to apply for a mortgage. if she does'nt get approval, you will need to consider alternatives.
     
  6. Bronte

    Bronte Frequent Poster

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    You should not think about this, that is her problem if she wants the house, it is not your problem. Far better to do as MF1 suggests.

    And if you don't want the house, don't want to deal with a house (repairs, rent, management etc) and don't want to be tied to another person financially (even if it is a sibling) and want your financial share you can force a sale.

    What is it you want? Start from there and work backwords.
     
  7. Gekko

    Gekko Frequent Poster

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    Beware of any possible gift tax implications. You may end up giving your sister an interest free loan.
     
  8. Vinnie_cork

    Vinnie_cork Frequent Poster

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    Sorry if this is slightly hard to read. I'm in a similar situation, a house was left to my parents, and it was put into name of myself and sister, I have been making the full payments to my parents to purchase the property and my sister was not (was never an issue), my sister is now getting married, house still in both her name and my name. I want to transfer ownership into my name only and sort out payment for full amount to my parents for the worst case worry something happens and there is a claim made on "my house"by new spouse. I won't be giving any money to my sister as I will take over full loan repayment. However i have been told that I might have to get the house revalued for stamp duty purposes and that I would have to pay 1% stamp duty on the half I purchase. Is this true, would I have to pay stamp duty? and if so only on the half in my sisters name? both or names are on the deeds but not sure if it says 50/50 share, if not who is to say how by how much % wise we split it. Both my sister and I never owned any other properties.

    this is something which may also affect the OP McD1978.