Advice Please - 3-way mortgage

lcheater

getmore4less wrote: »

So did your original agreement take account of this senario of you wanting out?

If none of those living in the house can fund the debt then you are stuck with this mortgage.

You can't move it to another house without it getting paid off.

Your only way out is to sell up and move on.

As per my first post, we had an agreement / declaration document written up by our solicitor when we moved in to say that I own 17.5% of the house (that’s what £50k out of £295k basically equates to) and that if the house is sold, I would get 17.5% of the sale value but out of that money, I would have to settle the mortgage. So, basically, the longer I stay in the mortgage, the more I pay off; hopefully the house will have increased in value and I would end up making a few thousand from it. That was the idea, to help me get some money out of it (as well as me helping my family out). The house is being valued after Christmas, and my current balance on the mortgage is £46k, so if we sold the house tomorrow for the price we bought it for, I would walk away with £4k. There was no agreement as such about me ‘wanting out’, purely because this is all very close family and they have always said this arrangement can be ended at any time by me (because they know I may have wanted to move out into my own place at some point).

No one living in the house can fund the debt – my nan and granddad get little more than the state pension, and my mum is already supporting the household by paying for other living costs for the house. As I have said, my brother could probably afford it, but he is not the sort of person to want to do this, so would end up jumping out the same time as I did if it came down to him having the pay the mortgage.

Sell up, share out the money and go our separate ways is looking like the only way forward. It certainly isn’t out of the question, and will be what we end up doing I expect.

I didn’t think you could move mortgages to another house – but other sections of this site talk about “Portable” mortgages…

Caz3121

lcheater wrote: »

so if we sold the house tomorrow for the price we bought it for, I would walk away with £4k.

Sell up, share out the money and go our separate ways is looking like the only way forward. It certainly isn’t out of the question, and will be what we end up doing I expect.

/QUOTE]

Remember there will be selling fees to come off too - is there anything in the agreement that talks about who is responsible for these or is it a % after fees?

getmore4less

As per my first post, we had an agreement / declaration document.....

But that only seems to have covered the financial side of when/if you sell

You seem to have failed to take account of the various senarios that could lead to needing to come to some agreement on what to do with the house.

Like the death of any one of you.

In this case you need to sell to release your funds what does the agreement say about how you go about doing this.

Do you have the right to say I want out we sell now.

If not then the others may not want to sell now or any time soon.

getmore4less

I didn’t think you could move mortgages to another house – but other sections of this site talk about “Portable” mortgages…

you can move mortgage(well protect the terms) but you have to pay off the debt to do this.

lcheater

Ah, well, it does cover death – but that’s not really relevant to the query here. The agreement covers deaths of my nan and granddad but is linked to their will (where they share their stake in the property with their 2 sons and daughter). Their share is defined as being what is left after I have taken my 17.5%. If I died, the mortgage would be settled by my life assurance offered by my employer. There is the option for whoever is living in the property to re-mortgage to pay their sons and daughter. Anyway, I don’t see how any of this makes any difference, because we aren’t talking about death, we are talking about me wanting to pull out.

As for having the right to say I want out NOW and therefore want to sell NOW – I don’t know for definite whether or not this has been written into the agreement, but its an agreement we have and understand between us. So much so, that my nan was the one who mentioned getting the property valued after Christmas – and she is keen to help me get my own property. This sort of side of the agreement is not in question here, all everyone needs to know is that I get 17.5% of the sale value of the property, and I am solely responsible for settling the mortgage with that money.

As for who is responsible for paying any mortgage settlement related fees – I am not sure. I need to dig the agreement out so I can re-read the exact wording.

I think we are slightly going off course here a bit – try to forget the details of the agreement – the financial element of it is what is important, nothing else.

mikeduke2

I think the area that you are missing, which has been pointed out, is how are you going to fill the £50,000 shortfall?

There is a mortgage on the house for (say) £50,000. You can't get out of the agreement until you either

a) get someone else to take on the mortgage, which would require a new agreement with your grandparents and is likely to erode your small bit of equity with fees, but would release you from the mortgage.
b) get your grandparents to take on the mortgage, either if their pension/saving are large enough (unlikely) or if they do some sort of equity release. (this will erode your equity)
c) Sell the house

Which one of these are you intending to do? If you can answer this, it should help the responses to your question

GemBlueTopaz1984

OP you ask if you can move your mortgage to another property, i might have this wrong but are you asking if you can move the mortgage without anybody else buying your share your current house?. If so then if your new house cost 100k and you already owed 50k then you would be asking for 150k on a house that is only worth 100k for example and have no deposit which obviously won't work. I might be totally off but thats what I understood by you asking if it was portable.

lcheater

mikeduke2 wrote: »

I think the area that you are missing, which has been pointed out, is how are you going to fill the £50,000 shortfall?

There is a mortgage on the house for (say) £50,000. You can't get out of the agreement until you either

a) get someone else to take on the mortgage, which would require a new agreement with your grandparents and is likely to erode your small bit of equity with fees, but would release you from the mortgage.
b) get your grandparents to take on the mortgage, either if their pension/saving are large enough (unlikely) or if they do some sort of equity release. (this will erode your equity)
c) Sell the house

Which one of these are you intending to do? If you can answer this, it should help the responses to your question

It will be option c) that we will do - its the only feasible option in our situation.

lcheater

This whole subject has become THE talking point leading up to Christmas and has now gone from being on the back burner to us actually starting to get the ball rolling to find out what our different options are (including me looking at Homebuy Direct Schemes).

Something my nan has raised and is looking at investigating is releasing equity in the house to pay the mortgage off. Is this feasible? We have loads of equity in the house, and would only need a maximum of £60k to clear the mortgage and pay me off.

BadgerFace_2

Could they not just downsize and live mortgage free?