Buying friend out of house

shopping_addict

Hi,
Hopefully somebody can help me/offer advice.... I bought a house with a friend a couple of years ago (although everything is in my name as my friends credit prevented her from getting on the actual mortgage) -we both put in equal deposits and everything has been 50/50 since (apart from I have been paying life insurance on top.

Anyway, now I would like to 'buy her out'. Am I right in thinking that we can just go on an average valuation (from say 3 estate agents), deduct from that what is owed on the mortgage so leaving our shared 'profit' -and then just give her half of this?

I have read a few similar posts on this and somebody said that she would also be entitled to whatever she has paid each month towards the mortgage -but im not sure this is correct....

Thanks in advance for your help.....:D

pmlindyloo

You say that it is your name on the mortgage soI am presuming that your name is on the deeds as well?

Did you have any paperwork drawn up through a solicitor when the house was purchased and regarding your friend's 'rights'?

If you didn't then I would expect some people may reply and say that legally the house is yours and it could be construed that your friend was merely renting from you.

However, since you seem to want to do the honourable thing I believe that 3 valuations and taking the average, deducting the outstanding mortgage and sharing the rest is the right way to go. After all you have both paid half the mortgage from what you say.

Was the mortgage given on your salary alone then? So there is no difficulty with your taking on the whole of the mortgage yourself?

I must stress that this is my opinion and not based on any legal arguments.

shopping_addict

Thanks for your reply. Yes the deeds are in my name and the mortgage was based upon my salary only. We didnt use a solicitor to draw up any paper work when purchasing...it was kind of just a verbal agreement (bit stupid I know, it would have benefited my friend more than myself and she wasn't bothered...so we didnt bother..anything to save money at the time I suppose!).

I realise I could just say 'what money?' as there is nothing on paper to show she has contributed half, but Im not going to rip her off as we are still good friends so just wanted to make sure I was working it out correctly.

Thanks again )

jbainbridge

You need to look at what the property would _sell_ for not what the estate agents would market it at ... the two are usually a fair distance apart!

shopping_addict

Thats what I was worried about...so just look at recently sold prices for similar properties in the area? Im thinking of a remortgage with extra borrowing -would the lenders estimate be more realistic do you think? Or will they undervalue it so to lend me less?

I dont trust estate agents, and dont like all this guess work...

LisaLou1982

If you dont trust Estate Agents then pay a surveyor to come out and do a basic valuation survey for you. Should be around £300

Strapped

shopping_addict wrote: »

Thats what I was worried about...so just look at recently sold prices for similar properties in the area? Im thinking of a remortgage with extra borrowing -would the lenders estimate be more realistic do you think? Or will they undervalue it so to lend me less?

I dont trust estate agents, and dont like all this guess work...

Recently sold comparables, and also check how the index of house prices in your area has moved since you bought the property, to see whether that suggests about the same. Lenders estimate will be low side, to minimise their risk. If you get estate agent valuation, don't tell them you are not actually thinking of selling, or they will go OTT to try to tempt you onto the market. Just say you want a realistic, quickish sell value.