My brother wants to buy half the flat off me...

Alec_85

... and I am very willing seller...
Rough figures:
Remaining mortgage is £86k, flat is worth approximately £145k. That would mean there's approximately £59k equity. The easy way would be for my brother to pay £29,500 for half the equity. However £20k is his limit. I am fine with this, and on the basis of 50% ownership the equity would become £40k (releasing £19k to me). 
I'm keen to get the capital as I plan to invest it elsewhere so I am comfortable reducing the equity, and therefore lowering the LTV (higher interest etc.).
Is doing all of this possible, and relatively straight forward? My current mortgage on the flat has no early repayment fee, so that's good, so I can theoretically remortgage at anytime. 
Thanks so much.

[Deleted User]

Is he proceedable, has he investigated his options regarding raising those funds ?

SpiderLegs

How about I give you the full £29,500 for 50% of your £145k flat?

gizmo111

Surely he has to give you around £72.5 K to buy half?

PRAISETHESUN

Unless I'm missing something this doesn't seem particularly favourable deal for you - why would you sell a potential £72.5k stake in your home (worth £145k) for £29.5k?

MWT

If I've understood correctly, what you want to do is take out a new mortgage for £105k in both names on a £145k valuation and put down a theoretical £40k deposit, and you are expecting to 'release' £19k by obtaining a new mortgage for £105k with only £86k to pay off?

grumiofoundation

MWT said:

If I've understood correctly, what you want to do is take out a new mortgage for £105k in both names on a £145k valuation and put down a theoretical £40k deposit, and you are expecting to 'release' £19k by obtaining a new mortgage for £105k with only £86k to pay off?

Or would brother take out mortgage for 105k in his name only, owning whole house and would pay the 19k to OP?

MWT

Net effect would be a larger mortgage, but split 50/50 with your brother paying half of it moving forward.

... and you get his £20K and the £19k residual from the mortgage.

Talk to a broker, may be worth trying to bump the 'deposit' a little so you can hit the 70% LTV level for a better rate?

Alec_85

MWT said:

Net effect would be a larger mortgage, but split 50/50 with your brother paying half of it moving forward.

... and you get his £20K and the £19k residual from the mortgage.

Talk to a broker, may be worth trying to bump the 'deposit' a little so you can hit the 70% LTV level for a better rate?

Thank you. I will.  And yes you've understood correctly, i didn't realise other people would struggle to understand it so much. Of course £29,500 isn't half of the full value of the flat, it's half of the current equity, the bank 'owns' the rest so yes, we would share the mortgage going forward.
Bumping up to a LTV of 70% is a good idea, thank you. I assume the mortgage company will need to formally value the property before they offer anything; my brother and I have agreed that £145k is a fair value for the flat (based on other nearby flats etc.) is there a risk that the mortgage company comes back and over-values the property? Probably a very naive question from me, apologies!

MWT

Alec_85 said:

I assume the mortgage company will need to formally value the property before they offer anything; my brother and I have agreed that £145k is a fair value for the flat (based on other nearby flats etc.) is there a risk that the mortgage company comes back and over-values the property? Probably a very naive question from me, apologies!

Yes, there will be a formal valuation and yes there is a risk that the value will be higher or lower than the number the two of you consider to be fair.

The impact of the valuation will be mostly on your LTV, it doesn't mean the two of you have to change your 50/50 split based on the £145k number... unless you want to of course...

The two of you will have to meet the affordability criteria as well of course.