co-owner buying me out

J

jimcarlow

Guest
Hi All

I was wondering if anyone has any advise on the following. having bought a house with a friend in 2000 the time has come to go our seperate ways - She has went to the bank and they have turned her down for the amount needed to take over the mortgage. She has suggested giving me the cash amount of the profit due to me on the house and not removing my name form the mortgage but instead drawing up a legal agreement stating she is taking full responsibility for the mortgage and as such leaving the bank in the dark.

This seems a bit strange to me but i was wondering if anyone has heard of anything similar. I should also say we have a tracker mortgage so it is in her benefit if this is possible and if it was legal and without too many complications I would be open to it also.

The alternative at the moment is to sell the house.

Cheers
Jim
 
Thanks, There seems to be a lot of negetives alright - the only positive for me I suppose is being able to move on . . . .
 
Hi Jim

What are your plans? Are you living in the house at the moment? Would you prefer to continue living there? Can you buy her out?

How much equity do you have in the house? I think you can sell your interest in the house to her and I am not sure that you need the bank's consent. If you do need the bank's consent, you can give her an option to buy your interest in the house for its current value. She would execute this when she is able to do so. You would also have a put option, where you had a right to force her to buy the house or sell it.

Your name would remain on the mortgage but she would pay it. However, you would be liable if she did not do so.

The cheap tracker mortgage is so attractive that you should be doing all you can to keep it. At the same time, if you both want to move on, you should stress to the bank that they would be replacing the cheap tracker with a Standard Variable Rate mortgage, although with only one name on it. If there is positive equity, they should go for it.

Brendan
 
Thanks Brendan, Basically there is about 40 k equity in the house and thats based on figures we have both agreed on after having the house valued, She basically wants to give me 20k cash as she has it saved but the bank arent giving her a mortgage or the option of taking my name off.

she wants us to do a deal without telling the bank as such but with legal documentation of it ect. I want to move on basically and buy a place with my partner. I should point out this house was bought by us as friends and we were never anything more so there is no back story of a break up and we havent had a falling out or anything. I am more than happy to sell her the house if possible.
 
Do you need to sell the house to buy the new house with your partner?

Having a mortgage will probably limit your ability to borrow.

Brendan
 
I think she needs to go back to to the bank. I can't see how you can draw up a legal agreement without the banks consent. Both of you have a contract with the bank. The bank will not allow you to sell her your share until the mortgage is either discharged or they agree to let her take on a full mortgage. In this case they have refused the latter.

Does she have a figure from the bank on how much of a mortgage they would allow her to have? If she reduced the mortgage by the 20K would this help. Does she have other savings to use against the mortgage to get it to a level where the bank will agree. Maybe she should post on here with figures. You've paid 10 years so there may also be leeway on the mortgage as the hardest payments should be over, there are options should as extending the term etc. If the bank agrees to that you could draw up a legal agreement with her to pay you back the 20K in instalments, if you were happy with that. The wisest course is that you both are no longer involved in the house ownership, it's too messy when people are not married.
 
Would it be possible for you (and possibly your partner) to buy your friend out? If the bank doesn't allow her to take over the mortgage, would it allow you to do so? You could then pay her 20K, i.e half the equity, she can add her savings and buy something else for herself.

Or could she get some family member, her father, perhaps, to take on the mortgage jointly with her?

The only other viable route seems to be to just sell the house, split the equity and buy something that both of you can separately afford.
 
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