Buying ex out

Rachel87

Hi, I could do with a bit (OK, a lot!) of advice before I take my next step... I want to buy my ex out of our house but I'm fairly certain the bank won't let me do it alone (I would easily be able to afford it at the interest rate it's on now but I have a lowish income and I'm guessing they just go by that rather than what you actually spend) I would like to do as much as I can by myself but my mum has offered to help me out.

So my questions are, would I be able to get a guarantor mortgage with my mum who is 63? This would be my first choice so I can remain independent(ish). If not, she's interested in buying my ex's share as an investment. Is the interest rate I'm on now calculated on me and my ex's earnings or is it just a generic rate? I'm on a fixed rate, not the standard variable. Would the interest rate be higher for a guarantor mortgage?

Also, regarding getting the house valued so I can give my ex his share, who do I go to for this? Everything I've read says to use estate agents and pretend to them that you're thinking of selling to get a free valuation..? But surely estate agents over value the house to convince you to sell through them? I read that the actual selling price in the UK is on average around 90% of the asking price. So do I knock 10% off?! Who else can I use for valuations? A surveyor? Can the bank do it?

Also, just read that I will have to pay stamp duty because we weren't married - is this true? House is worth approx £200,000.

Very grateful for any advice so I can go into this with some idea of what I'm doing!

glosoli

If you are on a fixed rate, when is this in place until, and is there a penalty for you leaving this existing contract early?

If you are remortgaging to another provider, a valuation will normally be done as part of this process, which will be organised by the lender. Presumably the solicitor you involve will use this figure.

There aren't many lenders who do guarantor mortgages, you really are best speaking to a local mortgage broker to see what options you have.

Rachel87

It's fixed for another year and a half, and yes, there is a penalty. Would this still apply if I was staying with the same lender?

glosoli

Rachel87 wrote: »

It's fixed for another year and a half, and yes, there is a penalty. Would this still apply if I was staying with the same lender?

Not necessarily but does your current lender do guarantor mortgages?

If not, you could look to replace your ex with your mother, however this may require the term of the mortgage to be reduced in line with your lenders policy (i.e, substantially increasing the monthly repayments).

AnotherJoe

Could your mother contribute a lump sum to enable the mortgage you need to be reduced enough for you to meet affordabilty criteria? If so then you can draw up a loan agreement with your mother whereby she doesn't want any repayments until,say you sell the house. A few lenders will allow such a mortgage, Santander and Nationwide for example.
Otherwise as said the issue is that a mortgage with your mother will mean the term is short and the affordabilty gets worse.

Thrugelmir

Try some mortgage lenders online calculators. Affordability may well be your issue. Something that even a guarantor does not negate, should you even manage to find a lender offering this option. .

Rachel87

OK, so I'm with Nationwide, who do offer guarantor mortgages, although I'm not sure if it's just for first time buyers. Using their affordability calculator, they would lend me around £94,000. My outstanding mortgage is £134,000. Would my mum be able to own a part share of the house, which would be £40,000 to make up what I need? Or do they only do 50/50 ownership?
Sorry for all the questions, I just want to make sure I have a head start on understanding my options before I approach the bank. Thanks to everyone so far!

AnotherJoe

Rachel87 wrote: »

OK, so I'm with Nationwide, who do offer guarantor mortgages, although I'm not sure if it's just for first time buyers. Using their affordability calculator, they would lend me around £94,000. My outstanding mortgage is £134,000. Would my mum be able to own a part share of the house, which would be £40,000 to make up what I need? Or do they only do 50/50 ownership?
Sorry for all the questions, I just want to make sure I have a head start on understanding my options before I approach the bank. Thanks to everyone so far!

As long as your mum would put a £40k lump sum in as a loan to you with no immediate repayment terms, most likely* upon sale. If you were thinking of her getting a £40k mortgage probably not but you could always ask. However if your mortgage would be, say a 30 year one, they are unlikely to give such a length to your mother, so if they gave her say 15 years that would increase your repayments probably beyond affordability.

Hence I suggest a loan because being part owner gets very messy especially with mortgages.


* for example you could have a side agreement (done legally with a second charge on the house) such that when you sell, she gets back her £40k pro-rated according to the value of increase in the house price. So if the house price went up by 50% when you sold, she'd get £60k back. You can make that agreement whatever you want it doesn't need to be pro-rated, thats just a suggestion.