Remortgage to buy out my sister

Jimbob88

Hello Guys,

Looking for some friendly advice if possible,


Me and my sister bought a house together in December 2015, we purchased the house at £125,000 and both split the deposit equally.

Since buying the house my sister contributed 50% for a few months but then for the past 7months she has only contributed 20% per month as she is not living here.


She is now wanting to come off the mortgage to pursue her own with her partner, we are trying to come to an agreement with the figure she is 'owed' / 'wants'


The house has gone up in value to £135,000 and my sister is wanting a share of the profit that the house has made, but i have explained that we aren't selling the house as yet. She is wanting a top end figure based on profit made by the house, whereas i see it as were not selling the house so only the equity in the house is dividable?


I will continue to have the mortgage and can afford to take the mortgage on my own.


Thank you!

amnblog

A shame this was not all agreed before purchase.

Sounds to me like she is entitled to £5K plus half the original deposit.

Jimbob88

thanks for the reply,


But surely the house valuation is a valuation if it is sold, just because somebody says the house is worth £135,000 doesnt mean it would sell for £135,000?


The equity we have in the house together is only £8,100

csgohan4

Another thread on why money and relatives/friends shouldn't mix. Family relationships get strained and destroyed over money. As you are finding out now.

You are now finding ways to pay your sister less with the pedantic comment about the valuation.

How are you going to know how much your sister is entitled to in the current market objectively independently ? Short of actually physically selling it??

What made you want to buy a house with your sister? When either one of you may get a partner a children and possibly move out, incurring stamp duty charges unless they sell their share or the house..

Jimbob88

Yes i know this now, i'm just looking for advice on what will be fair, weather the buy out price is taken from the valuation of the house as it stands today or if the buy out price is taken from the equity we currently own in the home.


We were given a lump sum of money by uncle and decided to put this towards a house as our local council were offering good deals.

csgohan4

Jameswild89 wrote: »

Yes i know this now, i'm just looking for advice on what will be fair, weather the buy out price is taken from the valuation of the house as it stands today or if the buy out price is taken from the equity we currently own in the home.


We were given a lump sum of money by uncle and decided to put this towards a house as our local council were offering good deals.

The thing is, your sister wants you to buy her out now, not in December 2015, when the house price has gone up. This is fair.

If your unable to, your sister may force a sale or worse ruin your credit file and refuse to pay the mortgage which you might afford now, but who knows in the future.

steeeb

Fair is her deposit back + 50% of the equity.

If you're being pedantic when she moved out should of stopped contributing to the mortgage at all and you paid it all and it would have been fair. Either that or pay 50/50 and then you pay her rent for your half at a marketable rate (which is likely more than the mortgage).

The fact she's been contributing 20% whilst not living there she could argue actually she's due more than 50% of the equity.

You really should of had all of this written down and agreed to BEFORE buying the property as you obviously disagree as to who is due what and may well fall out over it.

If you want to buy her out, offer her the amount she contributed to the deposit, plus 50% of equity. Either get 3 estate agents and take an average, or pay for an official independent valuer at your expense (£150 at a guess).

Ensure you CAN actually get a mortgage and give her the money upon transfer in to your name - with a mortgage involved you may also need a solicitor - I'm not sure on the specifics of this though.

Neutrinno

Jameswild89 wrote: »

thanks for the reply,


But surely the house valuation is a valuation if it is sold, just because somebody says the house is worth £135,000 doesnt mean it would sell for £135,000?


The equity we have in the house together is only £8,100

You make 'somebody' just sound like a bloke in the pub. If an independent valuer estimates £135,000 then that is completely fair to work off that basis. Hardly fair to make her wait until the property is sold, what if you had the property repossessed with a shortfall in the future? Is that fair on her then to receive nothing back after helping you out? She's also carried on paying although not living there, she deserves a split of the estimated equity plus her deposit back.

getmore4less

Jameswild89 wrote: »

Hello Guys,

Looking for some friendly advice if possible,


Me and my sister bought a house together in December 2015, we purchased the house at £125,000 and both split the deposit equally.

Since buying the house my sister contributed 50% for a few months but then for the past 7months she has only contributed 20% per month as she is not living here.


She is now wanting to come off the mortgage to pursue her own with her partner, we are trying to come to an agreement with the figure she is 'owed' / 'wants'


The house has gone up in value to £135,000 and my sister is wanting a share of the profit that the house has made, but i have explained that we aren't selling the house as yet. She is wanting a top end figure based on profit made by the house, whereas i see it as were not selling the house so only the equity in the house is dividable?


I will continue to have the mortgage and can afford to take the mortgage on my own.


Thank you!

(first bold)
what do you mean by this?

do you mean 50% of everything for a few months or just the mortgage?

(second bold)
you and sis are selling

If you buy her out you are the buyer

nb0825

You have to imagine you're selling the house, and what your sister would get if that was the case. Today you'd get £135k, so in theory you should pay your sister the value of her share today. Regardless of whether the house is actually being sold, you are buying "HER" share.

Thrugelmir

Jameswild89 wrote: »

The equity we have in the house together is only £8,100

If the house had to be sold you'd receive a lot less once fees are taken into account.