How can my sister buy me out?

SiblingHouse

Bought a house with my sister almost 5 years ago and now we're coming up to when we said we'd sell she doesn't want to. I am majority owner as I put down deposit and she has now paid about 50% of that into the house as she pays the mortgage - I live elsewhere. As our initial mortgage will soon come to an end should she remortgage to buy me out?

Value has gone up by roughly £20k due to work done etc. We have kept a log of what each of us has paid towards improvements.

Any advice gratefully received

TonyMMM

Was any written agreement made at the time you bought the house about what would happen if one of you wanted to sell and how you would split the proceeds ?

Does she have enough income to get a mortgage on her own for the amount she will need ?

wapow

May I ask what you mean by your question "how can my sister buy me out"


Based on that question and the content of your thread, it doesn't make sense.


What is the issue with her buying you out? If she re-mortgages to pay you your fair share, why is that a problem?


You agreed you'd sell, but her keeping it and buying you out doesn't make any difference to you except you'll have your money back + more!


However, she has to factor in the value of the house. THEN buy you out. If she is saying she only wants to pay you the amount put in, not considering the profit that is to made, then that is unfair.


You have kept logs of what you've each paid, if it shows you as the majority holder then this may work in your favour.


Regardless of if you are besties or not, ALWAYS draw up a contract !!!!!!!

Kayalana99

You just need to sit down and work out what percentage you own and what percentage your sister owns, then work out how much she needs to pay you to buy out your percentage.

getmore4less

If the mortgage she has been paying + her deposit was more than 50% she owns more than you or should do unless you messed up the initial agreement.

What are the real numbers of who is pay ing what and the initial agreement on how you deal with the equity and debt.

Who has been living in the place?

FatVonD

If you sold, for it to be fair, you should get back your deposit plus a percentage of the increase in value which, since you have invested twice what your sister has then you should get 66% of any increase.

She needs to apply to extend the mortgage by that amount to buy you out.

I would be biting her hand off to be bought out as you'd probably lose all your profit in estate agents and legal fees if you had to sell.

gettingtheresometime

I've read this as OP put the deposit on the house initially and the sister has paid the mortgage subsequently ....with the mortgage payments equating to half the value of the deposit.

What happens now depends on how far you are prepared to push matters - it may be that you have to go to court to force a sale - whether that be to a third party or to your sister.


What you need to ask yourself is what happens when the mortgage payments exceed your deposit?

paddedjohn

Also take into account that your sister has been living in the house and not paid you any rent

getmore4less

gettingtheresometime wrote: »

I've read this as OP put the deposit on the house initially and the sister has paid the mortgage subsequently ....with the mortgage payments equating to half the value of the deposit.

What happens now depends on how far you are prepared to push matters - it may be that you have to go to court to force a sale - whether that be to a third party or to your sister.

What you need to ask yourself is what happens when the mortgage payments exceed your deposit?

I read that as the capital part of the mortgage payments has reached 1/2 the deposit. so there is an expectation of a 2/3 1/3 split of something

That's not how you work out equity properly.

eg £110k house with a £20k deposit £90k mortgage 4% £450pm after 5 years £80000.

house goes up to £130k

if you use the mortgage payer only has £10k worth that's deposit person £20k is worth 66.7% and account after the mortgage is paid off they get £33350 which is not a correct way to do it.

Proper equitable shares of the initial £20k is 18.2% so gets back £23,660

The rent thing changes the balance.

one way is you factor rent = 1/2 the mortgage then the deposit of £20k also gets 1/2 the debt as equity so owns(£65k) 59.1%

After their share of the debt they get £36,830


but what actually matters is what the agreement at the start said, if they messed that up then it will need negotiation.

SmlSave

SiblingHouse wrote: »

Bought a house with my sister almost 5 years ago and now we're coming up to when we said we'd sell she doesn't want to. I am majority owner as I put down deposit and she has now paid about 50% of that into the house as she pays the mortgage - I live elsewhere. As our initial mortgage will soon come to an end should she remortgage to buy me out

If your sister doesn't want to then what are you going to do?
Are you saying that if she can't get a remortgage on her own then tough luck?

maman

SmlSave wrote: »

If your sister doesn't want to then what are you going to do?
Are you saying that if she can't get a remortgage on her own then tough luck?

I read it as sister didn't want to sell on open market but interested in 'buying' it herself ie buying OP out.