Could my sister buy my partner out of our mortgage?

TinyDragon1990

My partner and I bought a flat together as tenants in common in 2023, each putting in an equal part of the (very large) deposit and covering half the mortgage payments. We're now facing a potential split and I'm trying to get a handle on how we could realistically deal with the flat - grateful for any advice. 

I can't afford to buy my partner out of his existing share in the property, either in cash or by taking out a new mortgage (though I could afford the ongoing mortgage payments). In theory, my sister would be willing to move in with me and buy my partner out, but we're unclear on how that would work. She has a decent salary but no deposit, so presumably could not just replace my partner on the current mortgage. Could she get an additional mortgage to cover his share of the deposit? Could we remortgage? Or is this not workable, and we'll just have to sell the flat? 

For clarity, my sister and I would be comfortably eligible for a mortgage on a new property of this value with my deposit+our combined salaries. We just don't have the cash to cover my partner's share of the deposit. 

ACG

You would end up with a joint mortgage. 
How you split the payments would be up to you. 

I dont think its  great idea for your sister though. She loses her first time buyer status and what happens when one of you wants to move out or move their partner in?

MWT

TinyDragon1990 said:

In theory, my sister would be willing to move in with me and buy my partner out, but we're unclear on how that would work. She has a decent salary but no deposit, so presumably could not just replace my partner on the current mortgage. Could she get an additional mortgage to cover his share of the deposit? Could we remortgage? Or is this not workable, and we'll just have to sell the flat? 

Keep in mind that you would both be remortgaging to get the cash to repay your partner (presumably his deposit and a share of the growth in value of the property.

You would both be equally liable for that new larger mortgage, but how much each of you actually pays each month would be up to both of you to agree.

Possibly not a great deal for your sister though, what happens if she wants to move somewhere else in the future?

TinyDragon1990

ACG said:

You would end up with a joint mortgage. 
How you split the payments would be up to you. 

I dont think its  great idea for your sister though. She loses her first time buyer status and what happens when one of you wants to move out or move their partner in?

Thanks for your help. So to make sure I've understood, we would have to end the current mortgage and get a new joint mortgage as tenants in common? On the first time buyer point - would we have to pay stamp duty as only one of us is a first time buyer? 

My sister has no savings for a deposit and we both work in London, so she's pretty happy with the option as it's her only chance to get on the housing ladder and avoid having to rent alone or flatshare. We'd certainly be talking it through a lot more though - just want to understand what's financially realistic before we get to those discussions!  

ACG

You do not necessarily need to get rid of your mortgage, you could add your sister and apply jointly for a top up. 

As an alternative could your sister not contribute towards the bills? It would allow her to save up her own deposit? 

I know this is not the same, but whenever I sign any contracts for business, I always spend more time going over what happens if I want to get out of the contract than I do on getting into the contract. You dont want it to ruin your relationship, so just discuss what happens if one of you wants to move out (who gets what), what happens if one of you wants to move out but the other cant afford to them out? Get all the bad stuff out of the way now.

TinyDragon1990

ACG said:

You do not necessarily need to get rid of your mortgage, you could add your sister and apply jointly for a top up. 

As an alternative could your sister not contribute towards the bills? It would allow her to save up her own deposit? 

I know this is not the same, but whenever I sign any contracts for business, I always spend more time going over what happens if I want to get out of the contract than I do on getting into the contract. You dont want it to ruin your relationship, so just discuss what happens if one of you wants to move out (who gets what), what happens if one of you wants to move out but the other cant afford to them out? Get all the bad stuff out of the way now.

Thanks, I wasn't sure if that would be an option - and I'd assume that would be likely to work out cheaper if it is possible, given that our current mortgage is partway through a five year fix. 

Unfortunately contributing towards the bills wouldn't solve the central issue of needing to buy out my partner's share in the property. 

Good advice on getting all the bad stuff out of the way. We're definitely going to discuss it a lot more. But just want to know what is actually possible before we get into that. 

ACG

Probably not the cheapest way of doing it and might depend who your mortgage is with, but you could look at joint borrower sole proprietor mortgages. Basically, 2 on the mortgage, 1 on the deeds. This allows your sister to keep her first time buyer status. But it does not give her much security.  

Olenna

Are you able to pass the affordability check on your own income with your sister as a lodger?
You could both then agree to re-examine after the end of fix period