Own apt with friend - think she wants to sell

If you have no money then how do you expect to pay your half of the mortgage if you decide to stay on?

If EA's say house worth 200k and she accepts 28K negative equity and gives you 3k on top of it, then I would take it and walk away. Maybe get her to pay solicitor fees aswell and i think you have a great deal.. The alternative is you both agree to sell and then you owe 14K still to the bank if they sell at 200K.. so you are at a loss.

Nowhere to live... can you move back to your parents place or rent a place?
 
I have money as in I just finished up in a job last Friday and started a new one today. I have never been out of work. I have never been late with a mortgage payment. I have no savings is what I mean.
I can continue to pay my mortgage no problem.
SHE wants to buy a place with her boyfriend, I don't want to really do anything. She has asked me to think about all of this.
I am almost 30 years old, I do not want to move back in with my parents.
 
you said in your first post that you were out of work and now in min paying job.. .. hence why i thought you would struggle with repayments.

would she rent out her room?.. some banks accept rental income as a source of income when stress testing mortgages so the fact that she has rental income may help her get separate mortgage with her partner for new place.. maybe suggest she check that with her bank and retain this apt with you as an investment
 
Sorry, you're right.

I was when I started this post. I lost my job but got a new one the following day, it was min wage. I left it on Friday to start a new job.

She has been trying to rent out the room for 2 months now and no takers.
Will suggest that to her.
 
It is as you say a messy situation!

I totally understand not wanting to move back home (who would) and if you move out of this apt. the only alternative is to pay rent. Many view rent as dead money and probably equal to what you are paying on the mortgage. Personally speaking I would rather pay a mortgage than rent but that is in the long term.

The apartment is in negative equity and who knows when/if it will return to a positive position.

Perhaps a positive of moving back in with the parents would be an opportunity to save money to buy a place all by yourself! Or have to pay rent but in the current climate and in your position what is the harm in that as currently you are in a very uncertain postion as to which way the property prices are going to go.

On the basis that you verbally agreed to sell in 4 or 5 years time from the date of purchase and that is around about now. I think you friend is offering a good deal and perhaps if you push the boat or take too long that offer might not still be there in the future.

I note you say you do not want to sell with negative equity but we cannot always get what we want. You may have to wait a number of years to be in positive equity but during that time the equity position could worsen. Yes it is ashame you have not made any money from this venture but how much money have you actually lost compared to the amount of rent you would have paid for a similar apartment for the past 4 years?

Also if you can get your friend to agree in writing that if she sells the apartment in x years and makes x money that she will give you a portion of it that is a win win as she is not asking you to cover her for any losses she may encounter.
 
Thanks jack.
I appreciate that.
There's so much to think about.
At the moment I am thinking that it looks like a good deal - I get out without owing the banks 14k and get 3k.
I always thought I'd make a nice tidy little sum but hey, I'm not the only one.
I was always told that rent is dead money but in fairness, I've been paying a mortgage for the last 4 yrs and I have nothing to show for it. I would have been better off renting as I wouldn't be in negative equity.
Will sleep on it and see how I feel in the morning.
Thanks again.
 
carina said:
Yes but what she is saying is that she will take over the mortgage and I pay nothing. Then in 5 years if she sells it any profit made will be hers.
I have zilch in my back pocket.
We bought for 260 and we are both pretty sure that they are only worth 200 now so 60 would be right.
We will get it valued next week so we know for sure.
Click to expand...

Ok that's a terrible idea for both of you. You will still be liable in the banks eyes if she stops paying the mortgage (what if house prices fall and she feels bitter about the whole thing in 5 years). On the other hand I'm pretty sure you can still pursue her for any profit when she trys to sell if you decide to change your mind (what if house prices jumped again and you felt bitter about the whole thing in 5 years).
 
OP - your friend may not be able to 'buy you out'.

In this situation the property is remortgaged and your friend is the sole person on the new mortgage. The bank probably would not approve that as they would be giving her a mortgage on a property that is worth less than the value of the loan.

There is no way you should just let her 'take over the mortgage' unofficially - you could easily end up with a destroyed credit record if she decided to default further down the line.
 
MentalNote said:
Ok that's a terrible idea for both of you. You will still be liable in the banks eyes if she stops paying the mortgage (what if house prices fall and she feels bitter about the whole thing in 5 years). On the other hand I'm pretty sure you can still pursue her for any profit when she trys to sell if you decide to change your mind (what if house prices jumped again and you felt bitter about the whole thing in 5 years).
Click to expand...

I think you're misreading/misunderstanding what the OP is going to do. The other person will take over the mortgage and remove the OP from the mortgage and pay her 3k, how is this a bad deal for the OP? I would think it's a bad deal for the other person but they're the one who suggested it.

The 3k will enable the OP to start afresh without any debt which she would otherwise have. She can rent a nice place for herself, and she should remember that the prices quoted on Daft are asking prices for rent, not what they're actually getting.
 
i was presuming the other person's boyfriend would go on the mortgage, but obviously you're correct that the bank would have to agree.
 
I did think that myself too, but then remembered that OP had said he also owned an apartment, so that may not be an option either (from the banks point of view).
 
Let's just do the figures. You own nothing. You are both in debt by 28K (or 14K each). The negative equity of 28K may increase if property drops further. You also need to factor in the auctioneering fees and legal fees to sell.

Can you pay the total mortgage currently? You realise that both of your are seperately liable for the total mortgage? If she defaults you could be forced to pay.

She is offering you 3K to leave. I'd take that. But she may not get a mortgage. Can she based on her salary cover a mortgage of 228K? Then you both have to sell and make up the shortfall to the bank with perhaps a personal loan.

Even if you don't want to sell she can force you, do not be under an illusion about that. It would be better if you dealt with the issue now while still amicable and the figures are still manageable.
 
Forget about what it was worth before - that's in the past.
Remember that you could have been renting instead, so could have been in the same position anyway.

If you decide to sell, you need to be certain it is a "clean break"
- You would have to have your name removed from the mortgage. The bank may not go for this. Two employed people on a mortgage is less risk than one person.
- The mortgage is for an amount greater than the value of the property. The bank will be wanting at least the same (if not more, given where the banks are today) security than before... so your friend would probably need to add an extra person to replace you.
- There will be legal costs associated with all of this.
- It may be that stamp duty will be payable - as it is a second transaction.

If your friend can buy you out 'cleanly', at what you consider a fair price, then go for it. If not, then suggest one of you sub-let to the other for an agreed period of time, eg 2 years. At the end of which you can either sell, or look to renew the sublet.

Best of luck!
 
If I was in your shoes I would take the 3k and walk away. This is based on my own opinions on where prices of appartments (in particular appartments as opposed to houses) will go over the next 5-10 years. Assuming this appartment isn't some very large appartment in the heart of a city with 2-3 parking spaces, low management fees etc then I would have no hestitation in taking the 3k and leaving.

Go and rent somewhere else to live. Negative equity is something you will not get out of easily, it will take many years for either your salary to increase very substantially (so you can pay lump sums off your mortgage) or for the mortgage to decease a long long way so that the value of the property is greater than the mortgage. You have been made a great offer. To be honsest I think its a crazy offer from your friends point of view.
 
dereko1969 said:
I think you're misreading/misunderstanding what the OP is going to do. The other person will take over the mortgage and remove the OP from the mortgage and pay her 3k, how is this a bad deal for the OP? I would think it's a bad deal for the other person but they're the one who suggested it.

The 3k will enable the OP to start afresh without any debt which she would otherwise have. She can rent a nice place for herself, and she should remember that the prices quoted on Daft are asking prices for rent, not what they're actually getting.
Click to expand...

I don't think that was what was being suggested. Otherwise what was the relevance of the OP not being entitled to profit in 5 years? It would have nothing to do with the OP if they bought out the mortgage at this point.

The reality is that neither party will get a new mortgage on this property with out there being a substantial cash injection into the deal. 28K to clear the negative equity, plus probably another 40K as a deposit on the new mortgage. The bank won't give a 92% mortgage on a property like this* in the current climate. (*speculation disclaimer)
 
Ok to clarify-
It would all be done legally. She would "buy me out" - I would have nothing to do with it anymore. Profits in 5 or 10 years would have nothing to do with me.
I am not sure how the whole buying out thing works, hence the post!
She said that she saw a financial advisor recently and was told that she would be able to do it - she's on good money etc;
I definitely do not want to buy her out. I am willing to walk away. If all of this is possible.
I think the chance to get away from the negative equity is something I can't afford to pass up on. This apt is half an hour from the city. Not great re; Public Transport, I don't think it will ever sell.
 
If you can get out now, do it. Start afresh for yourself. Rent a room for 6 or so months and weigh up your options then.
 
That's where I'm at now..
I have been thinking about it all day and I think that I would be mad not to take the money.
I need to talk to her again and find out if she will get a mortgage on her own or whatever she needs to do to buy me out.
I am definitely not interested in buying her out so we'll just have to see if this can all work.
I am going to look at rentals on Daft now.
 
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