Help to Buy and ex-partner

Madeleine1234

My ex-partner and I purchased a flat in 2014 with the help of a Help to Buy equity loan (20% of purchase price). We have now split up, and were hoping that he could move out, and I could buy him out of his share. I secured an additional mortgage to pay him, but have now been told (after securing the mortgage and appointing a solicitor), that Help to Buy will only accept a transfer of equity if the money paid does not come from additional borrowing.

I feel that there must be a solution that means I can keep the flat (but I do not have the cash!)

HappyMJ

Madeleine1234 wrote: »

My ex-partner and I purchased a flat in 2014 with the help of a Help to Buy equity loan (20% of purchase price). We have now split up, and were hoping that he could move out, and I could buy him out of his share. I secured an additional mortgage to pay him, but have now been told (after securing the mortgage and appointing a solicitor), that Help to Buy will only accept a transfer of equity if the money paid does not come from additional borrowing.

I feel that there must be a solution that means I can keep the flat (but I do not have the cash!)

You can buy out the Help to Buy share if you can raise enough against the full value of the property.

Madeleine1234

HappyMJ wrote: »

You can buy out the Help to Buy share if you can raise enough against the full value of the property.

But if I do that, I won't have enough equity to pay the Help to Buy loan and pay my ex-partner.

Purchase price: £245,000
Help to Buy loan: £49,000
Current value: £300,000 - £340,000
My share: 40% (40% ex partner's, 20% government)

HappyMJ

Madeleine1234 wrote: »

But if I do that, I won't have enough equity to pay the Help to Buy loan and pay my ex-partner.

Purchase price: £245,000
Help to Buy loan: £49,000
Current value: £300,000 - £340,000
My share: 40% (40% ex partner's, 20% government)

Are you sure it's worth that much? You're talking about a 30% increase in less than 2 years.

New build properties tend to depreciate not appreciate and certainly not by that much in such a short space of time. You might be able to achieve no less than £300,000 if you presented it in it's best light but if you made it look like a dump when the valuers give it a value you might get a value very near to it's purchase price of £245,000.

If it's really worth £300,000 to £340,000 then I'd sell it releasing the equity to split between you. You can then use that equity to put down as a deposit on another property.

Madeleine1234

HappyMJ wrote: »

Are you sure it's worth that much? You're talking about a 30% increase in less than 2 years.

New build properties tend to depreciate not appreciate and certainly not by that much in such a short space of time. You might be able to achieve no less than £300,000 if you presented it in it's best light but if you made it look like a dump when the valuers give it a value you might get a value very near to it's purchase price of £245,000.

If it's really worth £300,000 to £340,000 then I'd sell it releasing the equity to split between you. You can then use that equity to put down as a deposit on another property.

Yes, I've had a number of valuations and the next releases in the development of the same spec are selling for more. The property is in greater London and on a Crossrail site.

I really, really don't want to sell it - I want to stay.

kingstreet

You cannot borrow more money without first repaying the equity loan.

http://www.myfirsthome.org.uk/schemes/help-to-buy

If the property value is £300 - £340k, the equity loan is £60k - £68k.

Surely your ex is entitled to 50% of what's left after the outstanding mortgage and equity loan are deducted from the value?

MJ - we've seen bigger increases on our site in Milton Keynes, so it is possible.

Madeleine1234

kingstreet wrote: »

You cannot borrow more money without first repaying the equity loan.

If the property value is £300 - £340k, the equity loan is £60k - £68k.

Surely your ex is entitled to 50% of what's left after the outstanding mortgage and equity loan are deducted from the value?

MJ - we've seen bigger increases on our site in Milton Keynes, so it is possible.

If we sold, yes. But if I buy him out, he would get 40% off the profit, and I would take on the entire mortgage and loan. But HTB will not let me buy him out with funds from an additional mortgage.