Getting out of joint mortgage.

screech20

Hey guys.
Am new here, so please go easy on me if i'm doing anything wrong.

In june 2010 myself and my best mate decided to go in together, for various reasons, to buy a house.

I told him last month that at the end of the 2 year mortgage deal that we got, i will be moving on.

To be honest, i am actually fed up here and want to move on, asafp, and get a place with my girlfriend.


Now what we agreed on is, that he will buy me out and stay here, which i though he would get help from his parents to give me my share back, then take on the mortgage himself in june.
I was wrong, and he actually is going to take on the mortgage, plus what he will owe me. Which won't be until july/august realistically.


Now what i'm thinking is, instead of waiting until the deal is up for him to borrow the extra and take the mortgage on, could we go into the bank and borrow the extra 25k in say, feb?

I could then do what i want to do, then in june/july, my name comes off, his name goes on.....



I hope that makes sense and i appreciate any advice that you can give.



Cheers

CLAPTON

obviously he must have a very good income if he has sufficient to remortgage in his sole name and also borrow 25k all at the same time

what's the mortgage?
how much does he earn?
what's the current equity in the house?

HappyMJ

screech20 wrote: »

Hey guys.
Am new here, so please go easy on me if i'm doing anything wrong.

In june 2010 myself and my best mate decided to go in together, for various reasons, to buy a house.

I told him last month that at the end of the 2 year mortgage deal that we got, i will be moving on.

To be honest, i am actually fed up here and want to move on, asafp, and get a place with my girlfriend.


Now what we agreed on is, that he will buy me out and stay here, which i though he would get help from his parents to give me my share back, then take on the mortgage himself in june.
I was wrong, and he actually is going to take on the mortgage, plus what he will owe me. Which won't be until july/august realistically.


Now what i'm thinking is, instead of waiting until the deal is up for him to borrow the extra and take the mortgage on, could we go into the bank and borrow the extra 25k in say, feb?

I could then do what i want to do, then in june/july, my name comes off, his name goes on.....



I hope that makes sense and i appreciate any advice that you can give.



Cheers

Legally this could get quite messy. Your mate could buy you out at current market values deducting 10% for sale costs deducting the outstanding mortgage including any penalty for repaying early then splitting the remaining equity. If you didn't have an exit strategy from this deal then this could be delayed for quite a while. You could force a sale but then the legal costs in doing so would diminish your share...and you need a buyer. If he can get the money in July/August then you will probably find the best thing economically for your best return is to wait until then. Borrowing the extra in Feb may be possible but he'll need to be on a good salary now. I'd at least wait until the fixed term comes to an end in July/August. You agreed on a 2 year mortgage so you should at least commit to that.

For the moment make sure your share in the property is secure. Don't allow any further charges on the property to be made, ensure the mortgage payments are made on time and when the property is eventually sold make sure the land registry knows your address so they can inform the solicitor dealing with the sale of your interest in the property.

screech20

Thanks for the fast replies!

Sorry i should have given a few figures!

The house was 167.500

we borrowed 120.000

currently owe 116.000

Although we are currently on the same salaries as when we got the mortgage, he is going onto around 33k as on jan, and i will also be going up, unknown amount as of yet.

When we got the mortgage, they pretty much only relied on my salary, if we were to borrow more in the next couple of months, they could do it using both again?


As for paying early and incurring penalties, that won't be happening, we won't be cancelling / taking names off until the 2 years are up.


Cheers

Thrugelmir

Would he be prepared to sell if necessary. Or is adamant in retaining the property?

opinions4u

This sounds like madness.

Borrow more jointly and then what? Increased chance of the mortgage lender agreeing to let him take the loan and property over in sole name.

You don't have to wait for the deal to expire for him to borrow more and buy you out.

Caz3121

screech20 wrote: »

The house was 167.500

Do you have an idea of the current value of the property?

HappyMJ

screech20 wrote: »

Thanks for the fast replies!

Sorry i should have given a few figures!

The house was 167.500

we borrowed 120.000

currently owe 116.000

Although we are currently on the same salaries as when we got the mortgage, he is going onto around 33k as on jan, and i will also be going up, unknown amount as of yet.

When we got the mortgage, they pretty much only relied on my salary, if we were to borrow more in the next couple of months, they could do it using both again?


As for paying early and incurring penalties, that won't be happening, we won't be cancelling / taking names off until the 2 years are up.


Cheers

What's it worth now? What was each of your deposit contributions?

He can deduct an amount usually 10% of market value to cover the cost of selling the asset such as advertising, solicitor and agency fees and turning that equity into cash.

You/He can keep the same mortgage deal but I'm not really sure if he'll be earning enough in January to buy you out so he'll have to sell as it's a fixed mortgage deal it'll be in his interest to wait until the deal expires before selling.

If I were him I would not extend the mortgage and rely on the bank allowing him to take over the mortgage and I don't think it would be in your interests to do that either.

Can you rent for a year? Your interest in this property will still be there and you can then decide at a later date. He might be earning more (at least he'll have enough payslips to prove he at least earns 33k) and also more of the mortgage would have been paid off. Even though you are responsible for the mortgage repayments I'm sure you could come to an agreement to get a lodger in to help pay towards your share of the mortgage.

screech20

Thanks for the replies guys.

I have decided to leave the mortgage be until it is up in june and wait for him to get sorted and give me the money.

In the meantime I have decided to take a step that i've always been against, and that is to rent a small place for 6 months or so.

Hopefully renting out my room will be for a majority of the rent.


Cheers

michelle2008

I think this is wise. I did a similar thing - but I was in your friends shoes.

Three valuations of property, take the average and make sure you are both comfortable with the valuation. It is actually very straightforward, and much quicker for you than putting the place on the open market.

screech20

Thanks. I'm glad I'm making the right decision.

So you also had a place with a friend that then decided to rent for a while?
How did you work out who still paid what while that person wasn't living there?

I've not spoken to him yet, he's away for a few days, but I'm assuming the money I (we) get from renting my room out, is straight up mine...?

Cheers.