Tricky one - advice gratefully received

axisofunity

Mgreen17 wrote: »

Originally Posted by pimento
So if there's only £25k each of equity (profit if it's sold), why is £85k not enough for you?
Wow missed that, OP would get an extra £60k just by saying yes to her offer. Well spotted.

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The house is worth £250K.
We both put in 25K each originally.
So in effect we have 100K mortgage each and 25K equity each.

I don’t understand the math’s in selling my half for £85K - sorry.

She would just sell it straight away for the full 250K making a tidy profit and I would lose all the £25K i put in originally. I just can’t afford to do that. Plus it’s completely unfair anyway.

I think you are confused. You own between you an asset worth £50k (Value less Mortgage). Half each. She owes you about £25k to buy out your half and assume your mortgage.

If she did that, she would own a house worth £250k. Have a £200k mortgage and would have paid you £25k, meaning any profit on sale to a third party would be... £25k for her.

You on the other hand, because your house has not appreciated in value since when you bought it, get your £25k deposit back. Since there has been no rise in the market value, there is no equity except the deposit cash.

Seriously, unless I took a slow pill today, the maths are simple? She has to assume your mortgage debt for this to work. If she can't do that, then you have to force a sale to raise external funds to settle the mortgage. If you did that, guess your profit would be.... £25k again. Because the bank gets the first £200k of the £250k sale price and you guys split the £50k cash left over.

Either way, you get £25k.

mynameisclare

Mgreen17 wrote: »

The house is worth £250K.
We both put in 25K each originally.
So in effect we have 100K mortgage each and 25K equity each.

I don’t understand the math’s in selling my half for £85K - sorry.

Forget what the house is "worth", that's irrelevant here. The only thing that matters is the equity that's left after repaying the mortgage - ie £50K. If you sold the house right now and split the profits, you would only get £25K each, not half of £250K.

So I really don't see why you think £85 is such a bad deal. I'd take it before she realises that her maths is worse than yours :rotfl:

Mgreen17 wrote: »

She would just sell it straight away for the full 250K making a tidy profit

No, she would make a loss: She doesn't just buy your half of the equity, she's also buying your half of the mortgage. So selling at £250K only gives her the £50K "profit", but she's already given you £85K - so a net loss of £35K.

KnightSmile

oh see i read it as she wants to buy his half of the house for 85k, when its worth 125k meaning he would make a loss of 15k.... (because he has the 25k deposit)

Mgreen17_2

KnightSmile gets it....

She "values" my half at £85K. IE since I owe half of a £200K mortgage she is effectively asking me to pay her £15K to get out of it.
+25K deposit = Overall £40K down.

In other words all sane people think there is approx £50K equity in the house.
Her negotiating position is that we are in negative equity to the tune of -£30K.

mumto2loves

KnightSmile wrote: »

oh see i read it as she wants to buy his half of the house for 85k, when its worth 125k meaning he would make a loss of 15k.... (because he has the 25k deposit)

yes if the house was sold his half is worth 125k but from that he's still got his 100k mortgage to pay off (leaving him 25k). she is offering him 85k and she pays off (takes over) the mortgage so he would be better taking the money and letting her get on with it.

Mgreen17_2

Why do you keep ignoring the third and correct option of forcing the sale and then getting half the equity. That way you aren't acting unreasonably.

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Dodger1 I understand what you are saying - but that will take 6 months minimum (prob a year) and be a massive legal headache with her using every delaying tactic in the book - the whole time while my bro is paying half a mortgage and another bloke lives there for nowt.

We had it valued 3 times. My bro then asked for 50% of 5K less that the lowest valuation - IE more than reasonable, and leaving her with a house thats worth a fair few quid more than she paid for it.

The Math's for my suggestion is:

Lowest valuation £245K
Bro will accept £240K

She pays me £120K for half.
I owe 100K (half the mortgage), so left with £20K.
My original deposit £25K
= £5k down.

dodger1

Mgreen17 wrote: »

Why do you keep ignoring the third and correct option of forcing the sale and then getting half the equity. That way you aren't acting unreasonably.

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Dodger1 I understand what you are saying - but that will take 6 months minimum (prob a year) and be a massive legal headache with her using every delaying tactic in the book - the whole time while my bro is paying half a mortgage and another bloke lives there for nowt.

You have made it very clear that she's not budging therefore you have the following options

1) force the sale, it doesn't matter if it's a legal head see a solicitor,

2) move back in and make their life hell

3) stop paying the mortgage and if they don't pay it, the mortgage company will sell it.

Frankly it sounds like people can walk all over your brother and if he hasn't got the gumption to easily sort this out tell him to stop bothering you with his problems. Personally I'd go with number 1 or 2, with number 3 the mortgage company could sell by auction and leave your brother with a huge bill.

Egg_custard_2

If neither your brother or his ex were living in the property, they would each pay half the mortgage, the tenant would pay all the other utility bills, and your brother and his ex would receive rent of which they would each get 50%. Why should your brother be worse off financially just because his ex chooses to live in the house, preventing it from being rented out to a third party?

How about he tells his ex that he now wants to live in that house for 2 years and her move out (with new boyfriend) while she continues to pay half of the mortgage and bills, to even things up?

What your brother should have done (and should now be doing if she is going to continue living there) is remove his name from all utility bills and stop paying for them immediately - this cannot affect his credit rating because if his ex defaults, it is only then her credit rating that would be affected. He should pay half of the mortgage, and charge his ex rent on his half share of the house.

His ex isn't being reasonable at all with her stance, so why is your brother so reluctant to make some demands of his own? She doesn't hold all the aces at all. Your brother and his ex should forget about who dumped who... that's history. This is a purely financial matter.

Unless there's a child involved? You haven't mentioned children so I have assumed not, but if his ex was caring for their child that would change things.

Ulfar

The OP is slightly confused or I am as the option of her buying his half for 85k is a non-starter even if they wanted too. The bank hold a charge on the property, that will not be lifted till the debt is settled in full.

Your ex cannot buy you out for a figure and have you remain on the mortgage. If you remain on the mortgage you haven't been bought out as you are still liable for the debt with your ex.

For her to buy you out she would have to pay you 25k and then take over the mortgage as a whole.

Until you have been removed from the mortgage you are both jointly liable for the debt.

Also for the OP to consider is how much in solicitor, conveyancing and estate agent fees would be required to sell the property. I would then reduce the amount I would be asking the ex for by half of these costs.

This of course is all jumping the gun as it dependant on the ex being able to take on the whole mortgage, this is not a given with the tighter lending criteria that now exist when compared to a year or two ago.