How do I sell 50% share in a mortgage free property

Melsky

Hi, 
My sister and I have inherited equal 50/50 share in our parents property (value ~£300k). The property is mortgage free; there are no outstanding claims against the property; we are in possession of the title deeds; inheritance tax has been settled.

My sisters son is the current tenant who wants to purchase my 50% share by raising a (~£150k) mortgage. My sister wishes to retain her 50% share in the property.

Are there any major obstacles to selling my 50% share, or in my nephew raising a mortgage to purchase a 50% share as joint owner with his mother?
Thanks for your advice!

MaryNB

He may have difficulty finding a lender. A lender might not be happy with his mother owning 50% of the property but not being on the mortgage. If he doesn't pay the mortgage and the lender decides to repossess the house it will be more difficult with her owning 50% but not being party to the mortgage so they may not agree to lend on those terms.

canaldumidi

Few mortgage lenders will lend unless the owners and borrowers are the same. So nephew and sister will need to take out a joint mortgage if they are joint owers.

Whose name is currently on the title? The deceased? The Executer? you and sister?

Assuming you've agreed a price (presumably based on the Probate value) then transferring title to sister and nephew in exchange for cash is straight-forward.

Melsky

Hi Canaldumidi, At the time of Probate the property was valued at £300k.  My sister and are are in agreement that we each own 50% of the property, ie: iro £150k each.
The Title Deeds have now been updated from our mother (ie: the deceased) to my sister and myself, however, to 'buy me out of my 50%' my nephew will need to raise a mortgage which, as you say, and MaryNB says above, my nephew to get a mortgage will be difficult under his shared ownership (with his mother).
Happy to receive any further comment for you - thanks!

canaldumidi

Speak to an independant mortgage broker, though as explained, I doubt nephew can get a mortgage in his sole name. Does sister already have a mortgage? Would she qualify for one jointly with nephew?

An alterative could be foryou to lend nephew the money yourself ie a private mortgage. You trasfer ownersip into sister/nephew's names and place a Charge on the property just like a mortgage lender would. The loan to you would have tobe paid back before the property could be sold.

You should also draw upa deed confirming the £150K loan, and the circumstances for it's repayment. If you charge interest, that's income for tax purposes.

rexmedorum

canaldumidi said:

Speak to an independant mortgage broker, though as explained, I doubt nephew can get a mortgage in his sole name. Does sister already have a mortgage? Would she qualify for one jointly with nephew?

An alterative could be foryou to lend nephew the money yourself ie a private mortgage. You trasfer ownersip into sister/nephew's names and place a Charge on the property just like a mortgage lender would. The loan to you would have tobe paid back before the property could be sold.

You should also draw upa deed confirming the £150K loan, and the circumstances for it's repayment. If you charge interest, that's income for tax purposes.

sounds like a potential recipe for disaster: what are you going to do if they stop paying that mortgage? evict? What will that do to family relationships.

Can the son not get a mortgage for the whole amount? Maybe one of those help from parents mortgages or something?
Or alternatively your sister can buy the 50%?

getmore4less

There are sole borrower joint proprietor options HSBC was the lender that comes up most for those but even they may have stopped.

There was a thread on here where the the borrowers were not proprietors.