Sell half of your house

crazyutka

I was wondering if it's possible to sell half of the house?

I am planning to move to another county but don't want to sell the house (the investment hasn't paid off yet), however, I have approx 20% equity, the rest is a mortgage.

I was thinking I could sell 50% to relatives (who are looking to buy a house in the future but aren't able to do buy full 100% yet due to affordability and lack of deposit).
if the transaction was successful they would have 50% mortgage (or partly with a deposit, if needed), I would have 20% equity and 30% mortgage.
any future profit would be 50/50.

Is something like this possible at all?

davidmcn

You can't have separate mortgages over each share, it would need to be a joint mortgage.

steampowered

The mortgage makes it difficult, as the lender will insist on the whole property being mortgaged - no lender will take a mortgage on just a share.

You could possibly look at taking out a joint mortgage between the three of you, and put in place a deed of trust under which the relatives agree to make most of the payments. However that would be additional legal work, and you would be liable for 100% of the mortgage if your relatives defaulted.

It might be better just to sell it. "The investment hasn't paid off" is not good logic. The house is worth what it's worth - whether you originally bought it for 5p or £500k is not relevant.

crazyutka

Thank you for your advice, it's very useful. However, I have to disagree regarding the investment part. The house is in the area where prices are growing rapidly. It's not worth selling today, but if trends continue, it will be able to make some sort of profit for us. Buying a house is not just about "not renting", it's about building equity that you can use to towards your new (better, bigger or elsewhere) house. We only had a house for a few years, therefore investment hasn't paid of. It's very straightforward. buying a house is an investment.

Sea_Shell

If you did (could) go ahead with this plan, what will you do when you feel it is the right time to sell, and want to release your equity, if your relatives can't afford to buy you out fully, or don't agree to sell up and move out?

AdrianC

crazyutka wrote: »

It's very straightforward. buying a house is an investment.

It can be. But it's a VERY unpredictable one, and it's one that has a lot of political opposition currently and likely in the future.

You currently own 100%, but are borrowing 80% of the value. What interest are you paying on that?

You want to sell 50% (at, presumably, current market value). You will then be borrowing 60% of the value of your half. You will need to be financially tied to your joint owners, and you will be subject to income tax on any rent you receive for your half. You will be subject to CGT on any returns on your investment.

Have you actually calculated what rate of sustained annual growth you'll need in order to justify the risks, while bettering other, more secure and less complicated investments?

csgohan4

What a terrible idea, family and money shouldn't mix

OP have you considered if they can't buy you out, don't leave e.t.c?

Even renting it out can be a nightmare, you need to fully research being a LL and the tax and legal implications that goes with it. It's not the gravy train it used to be

here are some example, but not all I have:

https://forums.moneysavingexpert.com/discussion/5999933/evicting-a-family-member-with-no-tenancy

https://forums.moneysavingexpert.com/discussion/5980752/how-to-get-out-of-joint-mortgage-with-mother

https://forums.moneysavingexpert.com/discussion/5933912/late-fathers-brother-wont-sell

https://forums.moneysavingexpert.com/discussion/5932721/property-with-sibling

https://forums.moneysavingexpert.com/discussion/5881156/buying-uncles-share-in-house

https://forums.moneysavingexpert.com/discussion/5817694/brother-wants-off-the-mortgage-havibg-to-sell