Sell 50% House Stake to a Mate?! How Easy?!

Chuffnuts

The house I bought 2 years ago is now up for remortgaging. Circumstances have changed now and I'm looking to get a place with the GF. Another friend has suggested he takes over on the mortgage in my place if we can come to a agreement on a figure, meaning i'm totally free of the house and able to get another one with the chick.

After originally mailing about 2 mortgages and recieving some helpful information, it may be better for me to just sell my half of the house.

How easy/hard is it just to hand over the mortgage to a mate? An are there any fees etc?!

Your help is appreciated.

Locoblade

You might want to clarify your current situation, from the first paragraph it would appear that you own the house outright on your own, but the second tends to suggest you only currently own half of it?

Chuffnuts

Oh yeah, sorry I currently own half the house and the other is owned by a mate. He wants to continue living there, whereas I'm looking to get out.

lisyloo

How easy/hard is it just to hand over the mortgage to a mate? An are there any fees etc?!

There will be some solicitors fees however you won't have to pay estate agents fees.

The biggest question is, does your mate have a 10% deposit.
He will presumably need to get a mortgage and these days, you can't get 100% mortgages, so he will need a cash deposit.

BYW - Even though he's only buying 50%, it's not a 50% mortgage.

Chuffnuts

Why would he need a 10% deposit?

The house has been valued at £158k and the remaining mortgage is for £143k.

Surely if he is approved by the mortgage company and he's having my half then why would fees or a deposit be needed?

Locoblade

Basically, he'd need to take out a mortgage for £143k/2 plus £7.5k, which is your half of the equity in the house, unless you want to give him your share of the equity for nothing? Assuming you don't, if he applied for that, there would now only be £7.5k of equity in the house (the remaining £7.5k of equity your current housemate owns). This is less than 5% of its value meaning the mortgage company would need to agree to a 95% loan, which isnt going to happen, hence he needs a deposit of about £7.5k to bring the LTV down to a reasonable level, unless as mentioned you give him your equity for nothing.

lisyloo

he house has been valued at £158k and the remaining mortgage is for £143k.

So what are you willing to sell your share for?
If you think it's genuinely worth £79K then I was assuming you'd want £79K for it?

If you are saying you are willing to let you mate have it for £71.5K and give him a £7.5K discount then that's very generous of you.

He may still find he needs a small deposit because that makes a 90.5% mortgage and not many lenders will lend more than 90%.

However one thing still bothers me.
Where did this valuation come from?
You see there are estate agents valuations where they pump up the prices in order to get your business and lender valuations where they err on the side of caution because they are lending.
Secondly prices are plummeting.
If you have a month old estate agents valuation then you might find it won't match the lenders valuation which will cause your mate problems getting a mortgage.

So you need to clarify
1) What discount are you willing to give you mate? 9.5% - incredibly generous if that's genuine valuation.
2) Where did the valutaion come from? and how recent is it?

Chuffnuts

So were are saying if he gets accepted on a joint mortgage for 143k and gives me 7.5k (which he has in his bank) we are all sorted?!

lisyloo

So were are saying if he gets accepted on a joint mortgage for 143k and gives me 7.5k (which he has in his bank) we are all sorted?!

Yes. Provided -

1) He agrees with your price.
2) The lender is happy with his income, credit rating and the LTV (it's 90.5% as already pointed out so may need to be brought down a tad)
3) Both of you need to pay solicitors fees and any fees your lender wants to charge for changing the mortgage (but still cheaper than an estate agent).

Chuffnuts

Any ideas on how much these solicitors fees are?

lisyloo

Should be hundreds not thousands.

There will need to be contracts on both sides, possibly a valuation, local & environmental searches, checks for charges, registering new charge at land registry etc.

You can get fixed priced deals for conveyaning I believe.

Although you seems to think of it as just a tranfer of equity, your mate would be mad to go ahead without getting all the usual searches and checks (and that includes a valuation).

You still haven't said where you got your valuation from but however good a mate he is, he should get an independent one or will he usut agree to your figure no question?

"Carlsberg don't do mates but if we did they'd probably be the best mates in the world"