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Real Life Monopoly! Please help x

Amie_007
Posts: 114 Forumite
Bear with me, this could be rather a long post.
I own my own home, valued this evening at £110,000 with an outstanding mortgage of £52,000. Equity = £58,000.
My partner (who lives with me) also owns his own home, current value expected to be in the region of £75 - £80,000 with an outstanding mortgage of £53,000. The mortgage is covered by a friend who pays rent. However, the friend is looking to buy his own house in the very near future and will be moving out. My partner has debts of £20,000.
Ideally we want to sell 1 one house, pay off his debt and move into a brand new house, but circumstances do not realistically allow this.
My idea tonight, is as follows, and I was wondering if anyone had any views on whether this is "do able."
Obviously I have a large amount of equity in my property and I was wondering whether I could remortgage my home for £105,000 (cost of my mortgage + my partners mortgage) I would then pay off my partners mortgage and then rent the paid house out to partially cover the cost of the £105,000 mortgage outstanding on the home we will live in. We would pay the difference. His house would stay in his name, as I understand that I would be taxed if I owned 2 homes.
This would reduce our monthly outgoings, and allow him to throw more money at the £20,000 debt he owes, hence paying it off quicker, in time allowing us to move into that dream home together.
I have a good credit rating and a secure job, and earn a decent(ish) salary. Assuming someone would lend me this amount of money, is the idea feasible. Would a mortgage company allow me to do this, to, in effect pay off my partners mortgage. Are there any tax implications for him or me in doing so.
In the future, when we are in a better financial situation we would sell one home and put the profit towards the new home together, still leaving one house, that we would rent out (thinking long term investment here)
Obviously, a contract would be drawn up, so in the event that we split up, then he has to give me back the £53,000 I paid to clear his mortgage.
Any help would be appriciated
Thanks in advance and I'm sorry if I waffled - Phew!
By the way I am 25 and my partner is 32, just in case it makes any difference x
I own my own home, valued this evening at £110,000 with an outstanding mortgage of £52,000. Equity = £58,000.
My partner (who lives with me) also owns his own home, current value expected to be in the region of £75 - £80,000 with an outstanding mortgage of £53,000. The mortgage is covered by a friend who pays rent. However, the friend is looking to buy his own house in the very near future and will be moving out. My partner has debts of £20,000.
Ideally we want to sell 1 one house, pay off his debt and move into a brand new house, but circumstances do not realistically allow this.
My idea tonight, is as follows, and I was wondering if anyone had any views on whether this is "do able."
Obviously I have a large amount of equity in my property and I was wondering whether I could remortgage my home for £105,000 (cost of my mortgage + my partners mortgage) I would then pay off my partners mortgage and then rent the paid house out to partially cover the cost of the £105,000 mortgage outstanding on the home we will live in. We would pay the difference. His house would stay in his name, as I understand that I would be taxed if I owned 2 homes.
This would reduce our monthly outgoings, and allow him to throw more money at the £20,000 debt he owes, hence paying it off quicker, in time allowing us to move into that dream home together.
I have a good credit rating and a secure job, and earn a decent(ish) salary. Assuming someone would lend me this amount of money, is the idea feasible. Would a mortgage company allow me to do this, to, in effect pay off my partners mortgage. Are there any tax implications for him or me in doing so.
In the future, when we are in a better financial situation we would sell one home and put the profit towards the new home together, still leaving one house, that we would rent out (thinking long term investment here)
Obviously, a contract would be drawn up, so in the event that we split up, then he has to give me back the £53,000 I paid to clear his mortgage.
Any help would be appriciated
Thanks in advance and I'm sorry if I waffled - Phew!
By the way I am 25 and my partner is 32, just in case it makes any difference x
I say what I like, I like what I say!
0
Comments
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Firstly, I'm glad you added that you would be obtaining a legal document if you did this for your protection in case of a split.
I don't know the exact circumstances, and would seek financial/legal advice first. My rough thoughts follow.
Find out what the market rental value of his house is and decide if its worth renting out.
Could he get a bigger, interest only, buy to let mortgage on his house??9would make things a lot easier, and being interest only would not cost much more than a smaller repayment mortgage, plus the interest is tax deductible against the rent.
Leading me onto your last point......yes there are tax implecations as you will have extra income through your rent.
there is far more you need to look into with an accountant initially, you need more specific information on your situation.
You certainly could remortgage your house if you need to, but I would pay off his 20K first with any extra money as I presume that would be at a higher rate than your motgage.Anything I write is based on my opinion only. Before acting upon any advice from anyone on a forum further professional advice should be sought.0 -
Wouldn't it be better for your partner to sell his house and clear his mortgage with the proceeds and use whatever is left to clear his debts and then have a little bit left over ?0
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Thanks for your thoughts on this.
Yes, his house is worth renting out and the income "he" would have from renting "his" house out would be used to pay of part of the large mortgage we would have on "my" house. We would then pay the difference, which would dramtically decrease our outgoings at this point in time. This would also allow him to pay more of his £20,000 debt that he has, thus paying it off quicker.
We want to keep both houses at this point in time, as the estate agent who valued my house yesterday, pointed out, we will never be able to buy 2 houses for £55,000 each, and it is something we would like to keep.
In the future, when money circumstances are better (his debt has gone and he has a better job) we will have to sell one house, to put a depositi down on one house together.I say what I like, I like what I say!0
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