My friend and I bought a new house together we were both ftbs, I'm thinking of buying my friend out , we are at the moment negotiating a fair price, does anyone have any advice for me on how I should proceed or the implications involved in such a transaction?
Friend house buyout
- Thread starter newhousey
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tosullivan
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you'll need a solictor for starters....ask them how you should proceed.
house when you bought it say cost 'x'
now the house is valued at 'y'
you owe your friend (y-x)/2
house when you bought it say cost 'x'
now the house is valued at 'y'
you owe your friend (y-x)/2
I think that would be a very good deal for OP
OP simply owes Y/2 to friend... on the assumption they went 50/50 on everything from day1.
bigchicken
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I think that would be a very good deal for OP
OP simply owes Y/2 to friend... on the assumption they went 50/50 on everything from day1.
I would have thought OP owes
(y-whats owed to bank)/2
Assuming all costs have been equally split, and given
X = Initial purchase price of house,
Y = Current agreed market value [and do this formally],
A = initial mortgage capital balance (if any)
B = current mortgage capital balance (if any),
then I would say OP owes friend
(Y-X)/2 [takes account of capital appreciation]
+ (X-A)/2 [takes account of initial capital contribution]
+ (A-B)/2 [takes account of equity acquired through mortgage payments.
Handily, that simplifies to (Y-B)/2 - or
[can be easier to understand when all steps are spelled out]
X = Initial purchase price of house,
Y = Current agreed market value [and do this formally],
A = initial mortgage capital balance (if any)
B = current mortgage capital balance (if any),
then I would say OP owes friend
(Y-X)/2 [takes account of capital appreciation]
+ (X-A)/2 [takes account of initial capital contribution]
+ (A-B)/2 [takes account of equity acquired through mortgage payments.
Handily, that simplifies to (Y-B)/2 - or
[can be easier to understand when all steps are spelled out]
There will be legal costs involved - you'll presumably need to re-mortgage solo, etc., and you should definitely get legal advice on how to proceed so title is clear, etc. Most of those costs really are, imo, your costs, although the (relatively small) charges relating to discharge of the current mortgage, etc., should probably be shared.
There may be a stamp duty liability depending on the value of the transaction / current value of the house. Get advice on this, but again - I regret that I think it's your problem!
Whatever you do, make sure both of you agree, and that you're both clear on the full details of the legal and financial transactions before you do anything. Take advice, together or independently.