Buying out advice

Glitterari

Hi, I'm posting this on behalf of my friend.

Last year she bought a flat with her boyfriend. They have now split up. She wants to buy him out and keep the flat. How does buying out work? What would she have to give him back? They've paid 50:50 on the deposit and all the mortgage repayments so far. They bought the flat for £115k and have 2 years left of a 3 year fixed rate mortgage (25 years at £667 per month). House prices seem to have dropped in the area, but a lot of work has been done to the flat since they've had it so it's in much better condition now (her ex-partner is a tradesman and did the work himself). it's still early days so he's not said whether he wants equity (if there is any) and things such as valuations haven't been done. She's desperate to keep the flat although it would be very difficult financially (her salary is £17k pa). She is thinking that she may be able to get the mortgage company to extend the loan to 30 or 35 years to decrease the amount she has to pay each month - is this a possibility?

I know she really needs to get in touch with the mortgage company and such like but any advice you guys can give would be greatly appreciated.

Glitterari

Surely someone can offer some advice?

~Beanie~

How much is the mortgage outstanding and how much is the flat worth? I think she might struggle to take the mortgage on her own - if she only earns £17K then assuming the mortgage is about £100K she is looking at borrowing over 5 1/2 times her salary which I doubt the lender would agree to.

Generally if there is equity in the property, then she should give her ex half of it.

The-Mortgage-Broker

Glitterari wrote: »

Hi, I'm posting this on behalf of my friend.

Last year she bought a flat with her boyfriend. They have now split up. She wants to buy him out and keep the flat. How does buying out work? What would she have to give him back? They've paid 50:50 on the deposit and all the mortgage repayments so far. They bought the flat for £115k and have 2 years left of a 3 year fixed rate mortgage (25 years at £667 per month). House prices seem to have dropped in the area, but a lot of work has been done to the flat since they've had it so it's in much better condition now (her ex-partner is a tradesman and did the work himself). it's still early days so he's not said whether he wants equity (if there is any) and things such as valuations haven't been done. She's desperate to keep the flat although it would be very difficult financially (her salary is £17k pa). She is thinking that she may be able to get the mortgage company to extend the loan to 30 or 35 years to decrease the amount she has to pay each month - is this a possibility?

I know she really needs to get in touch with the mortgage company and such like but any advice you guys can give would be greatly appreciated.

Hello, first port of call, get the property valued at todays price use 3 local estate agents. Once you have an average price she can remortgage but beware there may be redemption penalties. If she elects to stay with current lender she may be able to extend the loan but this will only reduce the monthly cost it will not make a better fit for the lender income multiples this is what establishes maximum borrowing amount. This problem can be over come by your friend using a guarentor say a parent etc who will stand if she defaults. remember though all costs to break the ex from the mortgage should be paid 50/50. It is also in his best interest to ensure that the mortgage is paid on time for until he is released from it, as he and also she are still liable for upto 100% of the mortgage if the other defaults. This comes under the "Joint & several" contract term of the mortgage.

I hope this help and other questions drop me a line.

Glitterari

Hi thanks for the replies.

They put down a 10% deposit of £11,500. Don't know how much the flat is worth at the moment, so have told her she needs to get is valued - will tell her to use 3 local estate agents, I guess that's her first port of call. I will let her know that she may need a guarantor, which I think her parents would be willing to do as she's quite sensible with her money and hasn't got any debt (aside from the mortgage).

Thanks for the advice (:

sdooley

Is there any way she can increase her earnings? If it's a two bed flat renting out the spare room would help with the mortgage.