Brother wants to get name off mortgage

NEWYORK72

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Hi
We bought a house together in 2005 for 189,000, house is now valued about 110,000
we also got a top up loan 40,000
Total remaining amount 140,000
I live in the house and he contributes to mortgage I pay 750 a month, he pays 500
Top up loan finishes March so repayment drops to 813 a month
He wants to buy a house with his wife, therefore get his name off our mortgage
I imagine I am in a good position financially with my salary to take the mortgage over,
As the house in negative equity what is the fairest option for us to settle this?
Also who would be in best position to give us advice, solicitor, accountant?
 
What would the rental value of the house be today if rented on the open market?

How did you come up with the deposit for the house? Did you both contribute and equal amount?

What is the mortgage rate? For example, is it a cheap tracker?

And finally, when you bought the house, did you do an agreement on what to do if one wanted to sell their interest?

Brendan
 
was he getting any rent to cover his 500, or was he just paying 500 to keep a roof over your head?
 
Hi
The rental income would be less than what the mortgage payment is approx 550 to 600 rental.mortgage 813
We contributed equal amounts to the deposit
It's a variable rate of 4.5%
No agreement was made upfront. His circumstances changed which meant that he moved away so didn't live in the house
 
Let's look at what you should both be paying at the moment.

upload_2018-2-4_11-27-35.png

So you are paying €175 too little at the moment, and he is paying €175 too much.

In simple terms, you should buy half his house for €55k . But you are taking over a mortgage of €70k, so he should give you €15k for doing so.

So, in summary, he should pay you €15k less some adjustment for the amount he has overpaid in recent years.

Brendan
 

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If I were the brother I am not sure I would be happy to pay €15k to take my name off an appreciating asset. Especially if I had been subsidising the rent for a while.

If the bank would agree to take the brothers name off the mortgage and the OP took the full liability that seems reasonable to me. The OP gets a house worth €110k for a mortgage of €813, and certainty on the ownership of his home, with no transaction costs or need to move house. The brother gets to walk away from a bad investment. Seems like a win win.
 
If I were the brother I am not sure I would be happy to pay €15k to take my name off an appreciating asset. Especially if I had been subsidising the rent for a while.

I think Brendan's numbers factor that in, at €175/month or just over €2k/year for the rent adjustment. So it would be €15k minus €2k for each year the OP has been living there without the brother. Bear in mind the brother wants out to do his own thing so presumably has no interest in the appreciating asset as an investment. It may be appreciating but it's currently in negative equity so this is the price of exiting now.

But it's hard to wrap your brain around your "investment" being worth less than zero. And I'd agree with you about the savings on transactions costs of a sale and moving house. If that was adjusted for as well as the rent, it may turn out that the residual is small enough that the brothers decide to settle for zero and everyone walks away happy.
 
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