Advice please re buying 75% share of property

Konisberg

Hi

Can anyone offer some advice on this please. My wife is considering selling her sister a 75% share in a flat we own valued at a little over 200k. Say she buys a 75% share at £150k. This would pay off our btl mortgage and leave us with 50k equity in the property. My questions is will my sister in law need a special mortgage for this? She will have a 30k deposit and borrow 120k. Thanks in advance

Konisberg

Can anyone offer some advice here please?

Dustangle

You really ought to consult a solicitor about this.

not_tonight_josephine_2

I don't believe your SIL will be able to do this - all owners of the property must be on the mortgage as I understand it, so you would have to take out a joint mortgage with her.

Reasoning for this is that the property is the bank's security against the SIL defaulting on the mortgage repayments, but 75% of a property is pretty useless as security - they couldn't repossess or sell 75% of the property, only the whole thing.

Hopefully someone else can confirm this?

Konisberg

Perhaps we could sell her the entire property for £150k and draw a separate legal agreement for her to owe us 50k NOT in any way related to the property?

VIGILANT22

what actually are you trying to achieve?

mickybro

A property can be shared on a percentage basis ie 60% 40% so you must consult a solicitor when sorted this will be entered with the land registry.

Konisberg

VIGILANT22 wrote: »

what actually are you trying to achieve?

Hi. Our plan will allow my SIL to purchase a share of the property. She can only raise 150k It will allow us to pay off our BTL mortgage but still retain an investment in property for our pensions (25 years away). We do not want to rent it anymore and are planning to sell it anyway. This plan helps her out, saves us fees etc.

As far as I see, there is nothing to stop us selling it to her in entirety for 150k and then drawing up a separate arrangement that she owes us the difference, say 45-50k.

irn_bru

Konisberg wrote: »

Hi. Our plan will allow my SIL to purchase a share of the property. She can only raise 150k It will allow us to pay off our BTL mortgage but still retain an investment in property for our pensions (25 years away). We do not want to rent it anymore and are planning to sell it anyway. This plan helps her out, saves us fees etc.

As far as I see, there is nothing to stop us selling it to her in entirety for 150k and then drawing up a separate arrangement that she owes us the difference, say 45-50k.

Except she may not get the mortgage if she's in debt to the tune of £50k! Plus you risk losing your share if one day she decides not to pay as it is no longer secured on anything. And how do you link it to the change in the value of the property?