Tenants in Common - buying out

accra

My friend and I jointly own a flat as tennants in common (50% each). I would like to buy my own place, and we have agreed that she will take over my share of the flat, with financial assistance from her parents, to give her full ownership of the flat.

I have received three estate agents' valuations which value the flat at £225,000. The equity in the flat would therefore be £60,000. This would mean that I am due £30,000.

Can I just transfer my half of the ownership to her, and she pays me the £30K (funded by her parents), or should her parents buy me out and become tenants in common with her? Are there any implications for differing legal fees?

Also, what implications might this have for the mortgage? Can she extend our existing mortgage rate (which is extremely good) to cover the full amount of the mortgage, or will she have to remortgage once I'm out of the co-ownership?

Many thanks for any help!

getmore4less

Is the mortgage joint ,

If it is then you just can't walk and take the money the friend needs to refimance new mortgage or get the lender to agree they can take the exsiting one on.

If the parents are coughing up £30k that will still leave 60k equity(if the valuations agrees but could be lower) so LTV is ok but what about salary multiples?

Also the actual value need to take account of the costs and should include some for selling even though you are not doing that.

If you have not been living in the place you need to consider any CGT liability.

Debt_Free_Chick

accra wrote: »

Can I just transfer my half of the ownership to her, and she pays me the £30K (funded by her parents), or should her parents buy me out and become tenants in common with her?

The financial arrangements are between your friend and her parents. It makes no odds to you - you just want your £30k. But you should have a solicitor take care of the transfer and the discharge of your current mortgage.

Are there any implications for differing legal fees?

I don't think so - either way, your solicitor needs to ensure that you are discharged from the current mortgage, that you get your money and that the title is transferred to the new owner (whether this is your friend or her parents).

Also, what implications might this have for the mortgage? Can she extend our existing mortgage rate (which is extremely good) to cover the full amount of the mortgage, or will she have to remortgage once I'm out of the co-ownership?

Many thanks for any help!

The current mortgage can not be extended as it's a joint mortgage for you and your friend. She - and her parents if they are to joint/co-owners will need to get a new mortgage. But that's a matter for them. All you need to be concerned about is the satisfactory discharge of the current joint mortgage.

HTH