Questions about leaving a joint mortgage, for I am a bit thick

DaFlump

Hello,

I don’t really think I’m thick, but the situation I’m in is making me a little dizzy and I could use some impartial advice/feedback.

I bought a house with a mate a few years back. We bought the house for £175k, taking out a joint mortgage, paying equal halves of the deposit, etc. Since then every expense has been 50/50. If the kettle goes bang and a new kettle is £15, we pay £7.50 each etc. Also we have paid off £35k of that. So we still owe £140k.

We now wish to sell. Conservative estimates (Zoopla etc) suggest the house is now worth £280k-ish.

The local estate agent we bought it through came round and valued it at £325k* citing some cosmetic decorating that needed doing. He said get the decorating done and it should be worth £350k-ish. He’s given us an A3 print out of photos & info about a house two streets away that is basically identical to ours but fully redecorated, and that is up for £350k. He has said use this property as a reference point. Get every room looking right for the estate agent’s photos, etc.

(*I personally think £325k is what our house will be worth AFTER we redecorate, but he who dares, eh Rodders?)

So………to keep the maths simple, let's say we actually sell for £325k. Based on that:

What kind of figure would we actually walk away with, each?
Where does the £35k we’ve already paid off fit into things?
How much can we expect to be chewed up in fees / solicitors / other admin etc.

ACG

£325k
- £140k (£175k - £35k)
- £3k? (Estate agents fees)
Leaves £182k.
= £81k each.

Nice on buying a house as mates and keeping it sensible. The amount of times you see people on here buying properties together and it going wrong is ridiculous. Just goes to show if your not a bit of a thicko it can actually work well.

DaFlump

Thank you. I had a feeling that's what it looked like but I wanted a second opinion.

Have I missed an expense or is your maths out? £182k halved is £91k?

Also, curveball question...

He's already moved back in with his parents up the road. I've now fallen in love with the house in a way I never did at purchase, because right now it's ALL MINE and I can slob about in privacy. So if I decided I couldn't bring myself to leave, and instead chose to buy him out I think I would have to:

A) Get ready to write him a cheque for £100k (he's ambitious, he will want at least that to walk away)
Secure a mortgage on my own that factors in the property AND the enormous cheque I will have to write him.

Is that right?

And extra question - does the value of your house go up if you're buying it off yourself?!? i.e. am I giving him £100k to clear off and then dealing with a £140k mortgage, or what?

This bamboozles me.

ACG

Sorry you are right, it is £91k...a Mortgage advisor who can not divide by 2, gotta love the British education system.

That is correct, but you would be saving on estate agents fees. £100k is a bit cheeky if that is not the value of the property and he wants to sell. He will be better off selling it to you for market value than he would selling it on the open market at market value for that reason alone. Added ot the fact you are mates, so it would make sense for him to do things the right way.

trailingspouse

You also need to add in the cost of moving your stuff out. Which of course you won't need to do if you don't actually move.

DaFlump

@ACG

I see.

So it would be more reasonable for him to expect (if we take the £325k evaluation at face value) me to pay him off with £91k, right?

I think the issue there is valuations fluctuate. We'd probably need to get three separate ones, and then average them out. And that's where we'd fall out because he'd only be interested in acknowledging the highest one.

DaFlump

@trailingspouse Oh, that's fine. We don't have much worth keeping. It'll be gadgets & boytoys that we sell off, old DVDs and stuff that can go to a charity shop. We'll probably keep 20% of our possessions, put the furniture out in the street as freebies if the buyers don't want it (my neighbours LOVE free furniture).

The stuff we're keeping will fit in the back of our cars when the time comes.

nicholbb

You are also saving on hassle of moving and paying legal fees and stamp duty. Plus you know if you do it up you'll be closer to the 350.

If you are happy with 100k pay them that, if not offer what you think if fair and if refused just sell and move on with friendship in tact. You wish to change the deal not them (although you do see really quite chill).

ACG

Why not put it up for sale, see what the highest offer you get is and then match it?

DaFlump

Because to buy him out I'd have to stretch to his payoff fee (lets say £100k) and then a mortgage on the remaining amount of £140k. Which means I need to borrow £240k or so.

But by matching the highest offer I'd be committing to match offers of £325k £350k, surely? There's no way I could do that.

I earn the same salary now as when we purchased, and we only purchased cos buddying up was the only way we could manage to get on the property ladder. As he wants to sell I'm effectively priced out of living in this same postcode solo. It's only because I have a foot in the door at this place already that I'm trying to assess how much of an advantage that is.

ACG

You would be matching the offer minus your half.

So if you receive an offer for £325k, you would pay him £162,500 for his half. That means you would need a mortgage for £232,500 (if I have done my maths correctly) - your half of the mortgage, plus his share of the property.