Shared Mortgage with Friend - Time to seperate!

pboy

Hello Forum, Long time reader, first time poster

A little background :

Moved to London in Sep 05, Rented for 6 months, thought it wiser to buy somewhere. Bought in March 06. Mortgage value 325k, Shared between two young professionals whose wages have risen 100% and 33% since then respectively. the mortgage was NOT Self Cert. House has appreciated ( according to an informal valuation ) to around 600k present day value. We are on a Variable rate, so have been stung slightly by the rises..6 times I believe since we got the mortgage.

I want to live solo, starting next year, in a different area. Now...I am going to write a business case style piece on the costs of the two options that lay ahead. Option 1, he takes on the mortgage and stays there. Option 2, We sell the house and go our seperate ways.

I was wondering if any of you knew the costs / what was involved in transferring a property to one party. and then the costs of selling somewhere. Being a first time buyer, this is something I have never had to do With my housemates wage, he can comfortable cover the 325k mortgage on his own...but the question remains whether he wants to take on that responsiblity ( and completely fairly ). I just wanted to put some figures together. Its a 3 bed, so the two rooms rented out would give over 1k a month conservatively..so that adds to the case of him keeping ownership.

I was going to break it down like this as costs from his point of view..but I had no idea on figures.



Transfer:

Land Registry Fees
Mortgage Owner Change Fees
Goodwill
Mortgage Rise due to Releasing equity for other party.


Sell

Estate Agent Fees Selling/Buying
Stamp Duty
New Mortgage Fees

Have I missed anything?

silvercar

If his half gains more than £125 he will have stamp duty to pay.

pboy

is this in relation to the transfer of the property to his name?

its over 125£ , lets say prop is worth 600k, his half is 300k, so when I transfer my 300k to him he pays stamp on that?

whats stopping me from selling my half to him for 124k?

poppy10_2

pboy wrote: »

is this in relation to the transfer of the property to his name?

its over 125£ , lets say prop is worth 600k, his half is 300k, so when I transfer my 300k to him he pays stamp on that?

whats stopping me from selling my half to him for 124k?

No, he doesn't incur any CGT by buying your half of the property.

I think silvercar is getting confused. This property was your main residence, and therefore won't incur any CGT.

Gorgeous_George

Who mentioned CGT? silvercar mentioned Stamp duty.



GG

silvercar

The stamp duty thresholds (1% for values over 125k, 3% over 250k...) apply to transfers of shares in property. So if you transfer 300k there will be 3% stamp duty to pay.

poppy10_2

Gorgeous_George wrote: »

Who mentioned CGT? silvercar mentioned Stamp duty.



GG

OK, it's me that's getting confused.
Oops :o:o

pboy

and I guess we have to get it officially valued before I transfer the property so the stamp duty figure is accurate?

Else I could transfer my half of the property for 1£ asnd he pays me some cash!

silvercar

That's called fraud. Would solve accomodation problems as HM Prisons have (Shared) rooms available.

poppy10_2

silvercar wrote: »

HM Prisons have (Shared) rooms available.

Do they? I thought demand was at an all time high, supported by strong fundamentals :beer:

pboy

ah right. Then he would pay 9k in stamp to get my half of the house. insane