Friend wants to invest in my BTL, we can't work out how...

snickpan

My BTL is an HMO, house value £600,000, my outstanding mortgage is £350,000.  Friend has £300,000 cash to invest, ie, buy half the house (and cover half the outgoings, and receive half the rent and half of the future equity).  I would love this, but my mortgage company says no to a declaration of trust, the restriction on the deeds means mortgage has to be paid off before any kind of sale. 
In April I will have the chance to renew the mortgage, or maybe go with a different lender - does anyone know if my friend would be able to get on board then?  Would it be just a regular mortgage, or do we need a niche one?
I've kept it brief, but hopefully this is all the info needed - one obvious sticking point might be that my outstanding debt is more than half the value of the house

user1977

You can sell from A to A&B whenever you like. If B has enough cash then why would you need a new mortgage?

Brie

Presumably you will still need a mortgage for £50k after your friend invests.  I think that will be the tricky bit as your friend will want you to be paying that completely rather than paying towards it as well.  It does sound like the friend buying in when you remortgage will be a little less problematic but you'll need an agreement to state that you are responsible in full for the mortgage payments which may be contrary to what the bank expects of the mortgage.

snickpan

Brie said:

Presumably you will still need a mortgage for £50k after your friend invests.  I think that will be the tricky bit as your friend will want you to be paying that completely rather than paying towards it as well.  It does sound like the friend buying in when you remortgage will be a little less problematic but you'll need an agreement to state that you are responsible in full for the mortgage payments which may be contrary to what the bank expects of the mortgage.

spot on, the conversation was that I'd pay my own mortgage, regardless of interest rate, she'd have no responsibility for it.  I think that last £50k may be the spanner in the works.  In effect, I am trying to flog all the equity in the property, and the bank own the other half, financially, that's a !!!!!! situation, like I'll suddenly have a 120% mortgage (or worse, can't bring myself to do the math).  No lender would entertain a £350K loan for £300K of property....

snickpan

user1977 said:

You can sell from A to A&B whenever you like. If B has enough cash then why would you need a new mortgage?

Ideally, but when a mortgage is in place, the lender's consent is required, lender has said no

user1977

snickpan said:

user1977 said:

You can sell from A to A&B whenever you like. If B has enough cash then why would you need a new mortgage?

Ideally, but when a mortgage is in place, the lender's consent is required, lender has said no

Maybe I misread the figures - in that case A&B buy with a new mortgage.

No19v87

Could you release £50k from your own home through a mortgage or increase in mortgage to then pay off your BTL mortgage with your friend’s £300k plus your £50k?

MWT

snickpan said:

In effect, I am trying to flog all the equity in the property, and the bank own the other half, financially, that's a !!!!!! situation, like I'll suddenly have a 120% mortgage (or worse, can't bring myself to do the math).  No lender would entertain a £350K loan for £300K of property....

It sounds like you are trying to end up with £300k in your bank account and still have a £350k mortgage, rather than paying down the mortgage by £300k, is that correct?

If so then it isn't going to work as you only have £250k equity to sell and the mortgage will always be on the whole of the property, you can't just mortgage your share.

snickpan

MWT said:

snickpan said:

In effect, I am trying to flog all the equity in the property, and the bank own the other half, financially, that's a !!!!!! situation, like I'll suddenly have a 120% mortgage (or worse, can't bring myself to do the math).  No lender would entertain a £350K loan for £300K of property....

It sounds like you are trying to end up with £300k in your bank account and still have a £350k mortgage, rather than paying down the mortgage by £300k, is that correct?

If so then it isn't going to work as you only have £250k equity to sell and the mortgage will always be on the whole of the property, you can't just mortgage your share.

Happy to pay what I can, as long as I get £60k out of it for myself

BikingBud

snickpan said:

MWT said:

snickpan said:

In effect, I am trying to flog all the equity in the property, and the bank own the other half, financially, that's a !!!!!! situation, like I'll suddenly have a 120% mortgage (or worse, can't bring myself to do the math).  No lender would entertain a £350K loan for £300K of property....

It sounds like you are trying to end up with £300k in your bank account and still have a £350k mortgage, rather than paying down the mortgage by £300k, is that correct?

If so then it isn't going to work as you only have £250k equity to sell and the mortgage will always be on the whole of the property, you can't just mortgage your share.

Happy to pay what I can, as long as I get £60k out of it for myself

Perhaps I'm missing something but where is the £60k coming from.

And happy to pay? As long as you get? Those are mutually exclusive!

I see nominal value of £600k/2 = £300k but you only have £250k equity so you owe £50k

Or is the part of the Chancellor's new debt naming and accounting scheme?

MWT

BikingBud said:

snickpan said:

MWT said:

snickpan said:

In effect, I am trying to flog all the equity in the property, and the bank own the other half, financially, that's a !!!!!! situation, like I'll suddenly have a 120% mortgage (or worse, can't bring myself to do the math).  No lender would entertain a £350K loan for £300K of property....

It sounds like you are trying to end up with £300k in your bank account and still have a £350k mortgage, rather than paying down the mortgage by £300k, is that correct?

If so then it isn't going to work as you only have £250k equity to sell and the mortgage will always be on the whole of the property, you can't just mortgage your share.

Happy to pay what I can, as long as I get £60k out of it for myself

Perhaps I'm missing something but where is the £60k coming from.

And happy to pay? As long as you get? Those are mutually exclusive!

I see nominal value of £600k/2 = £300k but you only have £250k equity so you owe £50k

Or is the part of the Chancellor's new debt naming and accounting scheme?

I read that as selling 50% interest in the £600k property to the friend for £300k, using £240k to reduce the mortgage and £60k into their bank.

Obvious problem is that leaves a £110k mortgage which the OP is happy to pay, but would be on the whole of the property, so there would need to be a deed of trust, showing the friend owning 50% outright with the mortgage balance coming out of the OPs 50% share in any sale.

... but the friend is still going to need to be on the mortgage which they probably do not want...