Question regarding a Joint mortgages and ending it

sathe

Currently I have a join mortgage with a friend on a house and its about to come to the end of a two year fixed period.

However my friend has decided he wishes to part ways. Now I don't really fancy selling so my choice (as I see it is too pay his half back) due to his job situation.

How does this work exactly (We are 50/50)? The things inside we can sort its more around the mortgage and the house. Now as the mortgage is coming to the end of the fixed term I imagine it will be easier to change, but how do I work out what he should get for the house? Have it valued?

Sorry for the somewhat 'nooby' question. I should be OK carrying on paying the mortgage myself but I don't really have 'half of house value' lieing in my back pocket so to speak.

Obviously if I have to sell the house completely then thats what I will have to do, just avoiding that if I can...



Thank you.

holly_hobby

What you will be looking to effect, in order to remove your friend from the mortgage and property ownership, is called a "transfer of equity" (TOE).

If you want to stay with your current lender, you simply apply to them for a TOE, they will assess your status and that you are able to support the mortgage on your sole income.

If they are happy that you are able to continue to service the mge on your own they will agree the TOE, and will ask that a conveyencer administers the legalities on your and their behalf.

The cots of a TOE is circa £400 - £600 (if straight forward, and depending where you are in the UK), plus any lender admin fees they may levy.

Ordinarilly they will allow you to remain on your current mge deal.

If your current lender refuses to release your friend, or could try sourcing an alternative lender whom may have a more generous affordability matrix ( a broker will be the quickest and simpliest route, to sourcing any suitable lender for your requirements, but there may be a fee), if your income simply isn't sufficient full stop, then of course the last option is sale of the property.

Hope this helps

Holly x

sathe

Thanks for you reply. What do I do in regards to my friend getting money though? (E.g me buying his half out).

holly_hobby

Sorry, forgot about that - you would have to apply for a simultaneous further advance (if you wish to stay with your current lender)

OR, if you seek an alternative lender, that will be an equity release remortgae with a simultaneous TOE.

In both cases the max equity released to effectively "buy out" your friend will be subject to your income and max LTV - which may be an issue depending upon your original LTV at pch and any subsequent increase (or not !) in market value. Meaning that you may not be able to withdraw their total 50% at the time he/she is released (obv if the property has fallen in value, their 50% share should be accordingly adjusted to reflect the change) .

Hope this helps

Holly

Goldiegirl

You can apply for a further advance to raise the funds to 'buy out' your friend, at the same time as applying for the Transfer of Equity.

sathe

Thank you both, that makes a bit more sense.

sathe

So it turns out the bank won't allow me to be on the mortgage on my own due to my residence history (moved around a lot when younger).

So no other choice but to sell. Lets hope I can sell it for enough...

Thrugelmir

sathe wrote: »

So no other choice but to sell. Lets hope I can sell it for enough...

No possibilty of your friend waiting a while?

sathe

Thrugelmir wrote: »

No possibilty of your friend waiting a while?

Very unlikely!

holly_hobby

Thats disappointing, but I can understand if they have moved out/on, why they would no longer want to be liable for a mortgage on a property they no longer live in. or they wish to apply for a mge in the sole name.

Well spring is just round the corner, which is is generally considered a good time to put a house on the market (chirstmas out the way and all that) .... to which I wish you well x

Holly

getmore4less

What was in the exit agreement when you bought?.

When it comes to selling there is little they can do if no one wants to buy.