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    • adam1976
    • By adam1976 5th Dec 17, 6:16 PM
    • 2Posts
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    adam1976
    Co-own a home but want to move out
    • #1
    • 5th Dec 17, 6:16 PM
    Co-own a home but want to move out 5th Dec 17 at 6:16 PM
    Hello,
    About 15 years ago, me and my dad inherited our house from my grandfather in London and we are joint owners. Value is probably around £700K and with £45K or so left on the mortgage. We both live there. Me and my wife and two daughters. My mum and dad. All in one roof.

    I have been desperate for years to move out but with about £20K savings on a £60K salary, its hard to save. Help to buy is out of the question as I am a co-owner of this property. My kids are settled at school in London and my parents simply do not want to move.

    They are open to me using some of the equity in this house to move out if I wanted. Obviously need a sizeable deposit in London.

    Would any of your experts be able to advise on potentially what I can do to get myself a home of my own in this scenario? Would I be able to remortgage and use some of the equity here to buy a second home? Or is this not going to be possible in my predicament?
Page 1
    • Amst
    • By Amst 5th Dec 17, 6:43 PM
    • 69 Posts
    • 30 Thanks
    Amst
    • #2
    • 5th Dec 17, 6:43 PM
    • #2
    • 5th Dec 17, 6:43 PM
    Have your father remortgage to buy you out as joint owner - may not be feasible if he's not working or has an income that can't support the new mortgage amount but otherwise you'd better work out how to save on your pittance of £60k per year.
    • adam1976
    • By adam1976 5th Dec 17, 8:00 PM
    • 2 Posts
    • 0 Thanks
    adam1976
    • #3
    • 5th Dec 17, 8:00 PM
    • #3
    • 5th Dec 17, 8:00 PM
    Anyone else?

    Agreed. Iím grateful that I earn £60k given that a lot of people struggle. Hard to save with a family of 4.

    Not sure my father is in any position to buy me out as he has zero savings (basically very bad with money).
    • Pixie5740
    • By Pixie5740 5th Dec 17, 9:06 PM
    • 11,202 Posts
    • 15,655 Thanks
    Pixie5740
    • #4
    • 5th Dec 17, 9:06 PM
    • #4
    • 5th Dec 17, 9:06 PM
    It’s not just a sizeable deposit you will need but you will also have to pay the higher rate of SDLT whilst you still own this property.

    How old is your father?
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • bowlhead99
    • By bowlhead99 5th Dec 17, 9:10 PM
    • 6,999 Posts
    • 12,607 Thanks
    bowlhead99
    • #5
    • 5th Dec 17, 9:10 PM
    • #5
    • 5th Dec 17, 9:10 PM
    I would forget trying to refinance a property you're not going to live in.

    The "extreme" solution is to sell the £700k property and after settling the mortgage and paying the estate agent fees and legal costs to do it, you and dad will have 320-odd thousand pounds to go and buy a new property.

    Your Dad does not need a house big enough for four adults and two children when there's only him and your mum in it. You could lend him £120k of your proceeds so he has enough cash to buy a £430k flat or two bedroom house for him and your mum, covering legal costs and stamp duties without any ongoing mortgage or savings needed to finance it, and a bit of cash in the bank for emergencies despite being bad with finances.

    Then you would have £200k remaining for you and your wife as a deposit in addition to the £20k you've saved. If you borrow 4x salary you can afford a £450k property for yourselves (including stamp duty and legal/moving costs etc) with a loan to value of under 60%, so a relatively cheap bracket in terms of interest rates available. If your wife works, you'll have more than the £60k gross income so could support the finance on a better place. If she doesn't want to work or can't work, you could upgrade some years down the line when you get some pay rises.

    Effectively you and your dad between you would then have £880k worth of property and £240k of mortgage (net equity £640k) instead of one cramped, £700k privacy-free property and £60k of mortgage (net equity £655k) and a bit of savings. The difference is some stamp duty, moving costs, legal costs etc but fundamentally you get personal space, independence etc and a better LTV mortgage than the average London family, and your parents are mortgage free with low cost retirement ahead of them.

    An alternative solution which perhaps you would also see as extreme is to just tell your parents that maybe they don't really want to move, but, tough luck, they have to move because you want your own space and they can't afford to stay in the house on their own because they can't get a £380k mortgage themselves on top of their £320k equity... So actually you are going to stay in the house (raising a £380k mortgage against the £700k property to give them their £320k share in cash) and they will have to find themselves a smaller place for themselves with the £320k cash plus whatever mortgage they can raise on their own.

    Whether you can do that depends on whether you can raise a 380k mortgage on your salary. Maybe not. So if not, you are looking at both downsizing and finding properties appropriate for the needs of the two separate households that you're currently trying to cram into one property.
    Last edited by bowlhead99; 05-12-2017 at 9:27 PM.
    • getmore4less
    • By getmore4less 6th Dec 17, 5:54 AM
    • 30,821 Posts
    • 18,429 Thanks
    getmore4less
    • #6
    • 6th Dec 17, 5:54 AM
    • #6
    • 6th Dec 17, 5:54 AM
    Thing is if you can't save now where is the money going to come from for the mortgage on the place you plan to buy?

    I think you need to start from a what can we afford, no point dreaming up schemes when you don't know how you will pay for them.

    £60k and a tiny mortgage(even if paying all of it) where is the money going?

    You have net £3.5k-£4k coming in.

    I would have a serious look at where that is going.
    you may have to make some hard choices if you want to make this happen.

    I would suggest you do two budgets using the SOA template
    http://www.stoozing.com/calculator/soa.php

    1. a this is now, see how you spend your money.
    2. a this is what it will look like with a bigger mortgage.

    if not sure start with a £1k mortgage then £1,500, £2,000

    The money has to come from somewhere so can you cut the current spends to make that work.

    This will tell you what you can afford from income which in turn tells you what size of debt you can support, then you can think about what that will buy.
    I suspect you could borrow more than you can afford even with the stricter criteria.

    .................................................. ..................
    Another option may be to look at upgrading what you have to make it more usable for all of you.
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