Shared ownership - selling my half

dorset_nurse

zappahey wrote: »

Does "gained" mean something else in your dictionary?

Good point- but he actually has "gained" some equity over the last 4 years, prehaps not the best choice of words in the circumstances.
It's only a loss when he walks away with 4k having put much more in.

zzzLazyDaisy

OP if the house is currently valued at £96,000 giving you £8,000 to share between you, and instead of letting your friend buy you out, you decide to sell, this is what will happen:

1 for the months it takes to sell, you will be paying your half of the mortgage. The value of the house isn't going to go up in that time, so every month's mortgage payment is effectively dead money. Lets say it takes a year to sell, and your share of the mortgage is £200 a month - that's £2400 - almost half your share of the equity

2 If the house is valued at £96,000 it is unlikely to sell for that - do your homework on what prices similar houses have sold for recently (note not the asking price but the final purchase price ). Say you get knocked down 5% (conservative estimate) That's £4,300 off the price - that's £2,150 off your share of the net equity

3 You have estate agents fees, say 1% of final price - That's around £900 (£450 is your share), plus solicitors fees, say another £500 (£250 to you)

By my calculations you are going to walk away with nothing but bills and hassle.

I can see that it galls to think that your friend is going to get the benefit of your work on the house - but if you sell the new buyer will get the benefit, the only difference is that neither of you are likely to get any money out of the deal once expenses have been settled.

Remember also that, as someone else has said, he is buying your share of the mortgage debt. By the time he has remortgaged to buy you out, he is unlikely to have any equity to show for it and may have to find extra money from savings just to raise the money to buy you out (on this point, have you actually approached the lender? because if he doesn't meet their lending criteria on his own, they will refuse to release you from the mortgage, and then you could be looking at trying to force a sale through.

In your shoes I would go for a clean break, take the money and run.

dorset_nurse

OP- how much do you have left to pay of your mortgage and at what interest?

Graham_Devon

brit1234 wrote: »

Its shared ownership, there is a high likelihood that one of the vast restrictions is not to allow sub letting.

Walk away before this scam scheme takes any more of your money.

Its shared ownership between 2 friends. Not a shared ownership scheme. The maths don't add up for a shared ownership scheme.

ashleypride

confused345 wrote: »

I feel like i should also add that ALL of these improvements, although financially 50/50, have been down to my effort and time with VERY little input from his side.

You both own 50% and you both payed 50% of the improvements, who did the cleaning, cooking, window cleaning or DIY makes no odds to that.

confused345 wrote: »

I bought a house with a friend approx 4 years ago for £118,000 in total and paid £15,000 each deposit leaving an £88,000 mortgage.

Interest only mortgage I take it? If so, if the value of the house of £96k is fair, then his offer of 4k is more than fair.

JQ.

zzzLazyDaisy wrote: »

OP if the house is currently valued at £96,000 giving you £8,000 to share between you, and instead of letting your friend buy you out, you decide to sell, this is what will happen:

1 for the months it takes to sell, you will be paying your half of the mortgage. The value of the house isn't going to go up in that time, so every month's mortgage payment is effectively dead money. Lets say it takes a year to sell, and your share of the mortgage is £200 a month - that's £2400 - almost half your share of the equity

2 If the house is valued at £96,000 it is unlikely to sell for that - do your homework on what prices similar houses have sold for recently (note not the asking price but the final purchase price ). Say you get knocked down 5% (conservative estimate) That's £4,300 off the price - that's £2,150 off your share of the net equity

3 You have estate agents fees, say 1% of final price - That's around £900 (£450 is your share), plus solicitors fees, say another £500 (£250 to you)

By my calculations you are going to walk away with nothing but bills and hassle.

I can see that it galls to think that your friend is going to get the benefit of your work on the house - but if you sell the new buyer will get the benefit, the only difference is that neither of you are likely to get any money out of the deal once expenses have been settled.

Remember also that, as someone else has said, he is buying your share of the mortgage debt. By the time he has remortgaged to buy you out, he is unlikely to have any equity to show for it and may have to find extra money from savings just to raise the money to buy you out (on this point, have you actually approached the lender? because if he doesn't meet their lending criteria on his own, they will refuse to release you from the mortgage, and then you could be looking at trying to force a sale through.

In your shoes I would go for a clean break, take the money and run.

By far the most sensible post on this thread and very good advice.


To all those who appear to have escaped from the House Prices Forum - please go back there. Your petty arguments are infecting this Forum now and ruining it. People come on here for genuine impartial advice not to hear you lot bickering over property politics. That's exactly what that forum is for, please keep it in there.

Orpheo

dorset_nurse wrote: »

Good point- but he actually has "gained" some equity over the last 4 years, prehaps not the best choice of words in the circumstances.
It's only a loss when he walks away with 4k having put much more in.

How has he gained if he put in 15K equity and now has an equity share of 8K. Am I missing some new math that you have discovered? I must be, considering that you have attempted to explain averages to me in another thread. I have been head of maths in two schools during my teaching career. Please wear a badge at work with dorset_nurse clearly visible, if I ever find you in front of me holding a syringe, I'll know it is time to panic.

dorset_nurse

He has gained a percentage of a house. A percentage of which I am unable to ascertain as the OP has not stipulated which type of mortgage he has, at what rate, and how much he has left to pay.

I have never said that this is a financial gain, but it is a business opportunity where he could make much more.

You are making yourself look ricidulous by assuming things Orpheo; as you have assumed my job by reading my username. I may have one degree in nursing, but it is not actually how I earn a living!
For all I know you could be a retired supply teacher in a primary school- I'm not pretending or assuming anything; just giving advice from my experience which has worked very well for me the past years and in the current market.

Orpheo

dorset_nurse wrote: »

He has gained a percentage of a house. A percentage of which I am unable to ascertain as the OP has not stipulated which type of mortgage he has, at what rate, and how much he has left to pay.

I have never said that this is a financial gain, but it is a business opportunity where he could make much more.

You are making yourself look ricidulous by assuming things Orpheo; as you have assumed my job by reading my username. I may have one degree in nursing, but it is not actually how I earn a living!
For all I know you could be a retired supply teacher in a primary school- I'm not pretending or assuming anything; just giving advice from my experience which has worked very well for me the past years and in the current market.

No. He hasn't gained anything. The house has lost 22K of value. Assuming his figures are correct, he has 8K of equity. From the facts I can work certain things out.

House bought for 118K with 30K deposit and 88K mortgage.

If the house is now worth 96K and they have 16K equity between them then they have a remaining mortgage of 80K.

The OP has, individually, assuming equalshares, paid down 4K of the mortgage and lost 7K of his deposit. It has cost him 11K + x, where x is his share of the interest paid, or interest paid/2. The value of x is likely to be significant, if they were paying an IR of just 2% (with a (speculated) mortgage term of 25 years) then x would be £3500.

Estimate: 15K deposit + 3.5K interest = 18.5k spent.

I haven't even factored in any capital repayments here.

Edit: Quick and dirty calculations indicate about £24k spent including capital repayments. Assuming IR of 2% and 25yr mortgage.

You are making yourself look silly by commenting on the numbers without understanding them.

Disclaimer: In the absence of facts about the mortgage, the above is simply an illustration of what might be. The facts could be better, or worse. The truth is usually stranger than fiction.

dorset_nurse

Obviously maths is your strong point because you seem to be rather weak at comprehension.

I say again; In none of my posts have I pointed out that the OP has financially gained from the purchase, only that he CAN gain in the future to prevent walking away at a loss. (You don't need to be good at maths to work that one out). I also have not commented on numbers (as you state) as that would also be assuming on behalf of the OP when the facts are not present.

In your previous post you only serve to prove that he will lose out if he walks away.
If you are so against BTL then explain it rather than picking holes in it.

Just so you know I don't live in Dorset either