Can I have a share in the property but not be on the mortgage?

missmunnypenny

Hello All,

This is my first visit to a chat forum. I'm not sure if what I want to do is even possible but if anyone can point me in the right direction I'd be grateful..
I bought a property with my sister 7 years ago on a Joint Tenants basis. After a year it was obvious we don't get along well enough to co-habit and I moved back to our parents whilst continuing to pay half of everything.
Now I want to buy a property of my own. The problem I have is that my sister doesn't want to move but can't afford to buy me out. And my wage (£18k per year) isn't enough to support two mortgages.
I'd like to let her stay in the house if at all possible but I'd need my name removing from the mortgage to be able to qualify for another one. Plus I estimate that we've accrued about £20,000 equity each which I don't want to lose. Is there a way that I can retain a percentage share of the house whilst coming off the mortgage and all responsibility/liability for the mortgage falling to my sister?
I really don't want to make her sell if I can avoid it. The property is worth around £110,000 if that helps?
Thanks for reading!

zppp

missmunnypenny wrote: »

Hello All,

This is my first visit to a chat forum. I'm not sure if what I want to do is even possible but if anyone can point me in the right direction I'd be grateful..
I bought a property with my sister 7 years ago on a Joint Tenants basis. After a year it was obvious we don't get along well enough to co-habit and I moved back to our parents whilst continuing to pay half of everything.
Now I want to buy a property of my own. The problem I have is that my sister doesn't want to move but can't afford to buy me out. And my wage (£18k per year) isn't enough to support two mortgages.
I'd like to let her stay in the house if at all possible but I'd need my name removing from the mortgage to be able to qualify for another one. Plus I estimate that we've accrued about £20,000 equity each which I don't want to lose. Is there a way that I can retain a percentage share of the house whilst coming off the mortgage and all responsibility/liability for the mortgage falling to my sister?
I really don't want to make her sell if I can avoid it. The property is worth around £110,000 if that helps?
Thanks for reading!

Hello and welcome to MSE

I think you are very limited in your options.
If your sister hasn't the capital to buy you out, you are going to have to sell the property, repay the mortgage and take whatever is left over between you.

The other option is that your sister applies for a mortgage in her sole name and requests additional borrowing of £20000 to pay you back. This means that she could stay in the property, but could be very complex and costly.

missmunnypenny

I've scoured the internet for tips on what to do but can't find anything remotely along the lines of what I'd like to do.
Sadly I think that you are right about the house.

And thanks for the warm welcome!

missmunnypenny

DVardysShadow

Just to add another aspect to this, in general, it is not people who are 'on the mortgage', it is the property which is on the mortgage and the people who are on the title deeds as owners are the ones who are responsible for paying. So if you want your £20,000, you will have to get your sister to buy you out or sell up.

bottlehalffull

"After a year it was obvious we don't get along well enough to co-habit"

How did you manage when you were growing up? Did your parents referee?

tux900

Another option would be for you to sever your joint tenancy ownership and convert to Tenants in Common. You could then sell your half to a third party.

Presumably (or hopefully at least!) you want to be amicable in which case the it would depend on what your sister thought about someone else moving in!

Mathew

DVardysShadow

MJNewton wrote: »

Another option would be for you to sever your joint tenancy ownership and convert to Tenants in Common. You could then sell your half to a third party.

Unlikely to work out practically. Once sister understands that it could allow a part share to be sold, sister would be unlikely to consent. And a half share will probably only sell for considerably less than half price.

pinkshoes

SO if it's worth £110k, and £40k equity (£20k each...), then that makes the mortgage £70k. You can borrow at 3.5x your salary or joint salary.

Could your sister take over the £70k mortgage (she'd need to earn £20k to do this), then pay you your £20k equity in lump sums over several years? (draw up legal contract!)

Are your parents in a position to help your sister buy you out i.e. they pay you your £20k equity, and she pays them back?

bryanb

DVardysShadow wrote: »

Just to add another aspect to this, in general, it is not people who are 'on the mortgage', it is the property which is on the mortgage and the people who are on the title deeds as owners are the ones who are responsible for paying. So if you want your £20,000, you will have to get your sister to buy you out or sell up.

Not sure you're completely right. People sign a mortgage document,it does not have to be all the owners who are on the deeds.
The lender takes a charge on the property. The charge can be for a small proportion of the property value.
I have actually done this.

tux900

DVardysShadow wrote: »

Unlikely to work out practically. Once sister understands that it could allow a part share to be sold, sister would be unlikely to consent.

Joint tenancy can be severed unilaterally, and the actions of a tenant in common for their share is equally unaffected by the other party. That's from a legal perspective; family harmony is obviously something else entirely!

The lender obviously has a say in it as they would need to approve the third party for the purposes of the new mortgage.

And a half share will probably only sell for considerably less than half price.

Not at all. Nearly everyone that's performed a transfer of equity in these sorts of situations gets the property independently valued as a whole and, assuming a 50:50 ownership ratio, transfers at half this value.

We're not talking about sticking half the house on Rightmove here - it is usually sold to a buyer known to both parties. In my personal case I bought a house with a friend - he later sold his half to my girlfriend at half the value of the whole (with the equity balance being split between him and I).

Mathew

DVardysShadow

MJNewton wrote: »

And a half share will probably only sell for considerably less than half price.

Not at all. Nearly everyone that's performed a transfer of equity in these sorts of situations gets the property independently valued as a whole and, assuming a 50:50 ownership ratio, transfers at half this value.

We're not talking about sticking half the house on Rightmove here - it is usually sold to a buyer known to both parties. In my personal case I bought a house with a friend - he later sold his half to my girlfriend at half the value of the whole (with the equity balance being split between him and I).

Alright, let's put it another way. A half share of a house does not generally have an open market value. What you describe only happens where people know each other and the buyer wants to live with the remaining owner