Shared Equity Home - What to do next?

Luke1987

Hi all,

First time poster, I am looking for some advice on what to do/we can do with a shared equity home.

My ex partner and I own a house that we bought for £115k 4 years ago, we paid £5k deposit and the builders hold 20% of the equity for the first ten years, upon which we are expected to buy it from them at 20% of the value when we bought it or the value after 10 years, whichever is higher. We got a mortgage from Halifax to cover the remaining cost of the house.

Since splitting almost 2 years ago now I have moved away from the area and she has continued to live in the house, paying the mortgage payments by herself, on time every month. I/we have recently been exploring many avenues so that we can sort the current situation in as amicable way as possible.

She has tried to buy me out of the house, which I was fine with, I asked for and we agreed on a payment of 10k for her to take over my equity of the house, she approached Halifax and they were happy for her to take the mortgage on herself and extend it to cover the 10k to buy me out, however the builders who own the 20% would not allow this, does this sound commonplace that they would reject a move like this? She does not have access to the 10k to buy me out any other way.

I have looked into the possibility of taking on the house and renting it out, I believe this would require me to buy the builders 20% from them, I am of the belief they will not allow the property to be rented out whilst they still have their 20% equity, can anyone confirm this also?

We have looked into the possibility of selling the property however we have had the property valued and it has dropped from the initial 115 that we bought it for to 105, this is what the estate agent told us we could expect to get for it. I am slightly bemused by this valuation, what reasons would there be for the valuation to go down? I have freinds who have bought on a similar scheme who have bought similar houses for 150 and 18 months later are able to sell them for 180?

If anyone else has been in a similar situation or can offer any advice at all, it would be much appreciated!

Thanks

AnotherJoe

This isnt any help to you but I'm staggered how many of these part purchase house deals are coming up on here with this sort of issue, where they are worth less after TEN years than when bought.You are by no means the only people in this catch 22 situation.

Whereabouts is this house? Seems to me either something exceptional occurred in the area, like mass redundancies, or they were grossly overpriced in the first place.

Luke1987

The house we are trying to sell is in Sheffield.

saverbuyer

I'm struggling to work out why you would get 10k as your "equity" on a house valued at 105k. Do you have a short mortgage term or have you made overpayments? If your mortgage is a standard 25 year term, you could find that you actually have no equity.


If you want a clean break, you might be better forgetting the 10k and getting the ex to just remove you from the mortgage.

Luke1987

The 10k value that we landed on was based on the fact that I paid the 5k deposit when we bought the house and I asked for another 5k on top of that to be bought out. This was agreed upon before we had the valuation of 105-110k and the halifax were happy to extend her mortgage to cover the full value of the mortgage and the additional 10k, it had to go through the builders who subsequently rejected this.

We are on a standard 25 year term yes.

Grenage

If the house has decreased 10k, I'm not sure how you figure a 10k return on 2 years of mortgage payments when the house has lost 10k in value.

Sounds like your ex wife is getting screwed.

mrginge

9% drop in value, no contribution to the mortgage in 2 years and you want a 10 grand payoff.

Sounds like a right deal.

Luke1987

We have paid 4 years of the mortgage repayments.

Plan b then, she is happy to stay in the house and continue to pay the mortgage and live there, if it has to be like that then I am happy to let her, what would the implications of this be 10-15 years down the line?

If I wanted to get a mortgage to buy a house with my new partner Im guessing the fact that I would be still liable for 50% of the mortgage would have an effect on a) my ability to get a 2nd mortgage and b) the amount the banks would be prepared to lend?

Also if we decided to sell the house in 10-15 years would she have a case to say that she was due more than 50% of the sale as she has been the one living in it and paying the mortgage?

Thanks

Grenage

I believe the easiest thing for everyone concerned is a simple transfer of equity. There would be no additional lending or remortgage, and your stake in the house would simply go to her.

If you both decided to sell the house in 15 years, and she's been paying the mortgage for 17 years, she'd be entitled to a damn sight more than 50%.

Seriously, it's lost value and the money is gone - just walk way.

mrginge

Luke1987 wrote: »

We have paid 4 years of the mortgage repayments.

No. She has.

Plan b then, she is happy to stay in the house and continue to pay the mortgage and live there, if it has to be like that then I am happy to let her, what would the implications of this be 10-15 years down the line?

If I wanted to get a mortgage to buy a house with my new partner Im guessing the fact that I would be still liable for 50% of the mortgage would have an effect on a) my ability to get a mortgage and b) the amount the banks would be prepared to lend?

You remain liable for 100% for the mortgage.
You would be assessed on affordability as such.
You would be liable for 3% stamp duty surcharge aswell.

Also if we decided to sell the house in 10-15 years would she have a case to say that she was due more than 50% of the sale as she has been the one living in it and paying the mortgage?

Thanks

Well of course she would. Why would you think you were entitled to any equity gain?

mrginge

Grenage wrote: »

I believe the easiest thing for everyone concerned is a simple transfer of equity. There would be no additional lending or remortgage, and your stake in the house would simply go to her.

Erm. What?