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Help! Mortgage queston

Discussion in 'Personal' started by hardbastard, Jul 27, 2011.

  1. hardbastard

    hardbastard New commenter

    just can?t quite get my head round the maths here and who owes what. I?ll explain.

    About 4 years ago, I bought a flat with a friend. The cost was £148,000. We put down a 5% deposit with the bank, meaning that the mortgage itself was for £140,600.

    Fine. He now ?wants out? and the girlfriend wants to buy his share and move in with me. I have had the flat valued and it has gone up to an estimated £154,000 so that?s a £6k increase. I know a final sum is heavily open to negotiation because, for one, if we were to "just sell it," it may not ever get its value the estate agent say its worth, but I cant figure out how to break down how we reach a fair way of working this...

    So, if the girlfriend now does a transfer of equity and he *** off, what is he owed, exactly? He says he is owed his share of what he owns of the assets and he also keeps going on about the deposit, plus 50% of the increase? Is this true? What about the deposit? What would we need to pay him to get him out? I should also take into account that this is a leasehold property and there are currently around £3000 of communal works fees being paid off which won?t expire for ages (they?re being paid on a monthly basis). Therefore, around £1500 would need to be deducted from his claim.

    Hope someone can help!!
  2. doomzebra

    doomzebra Occasional commenter

    He paid half (£74,000). He is entitled to half of the current value (say £77,000). The communal works fees would not be applicable as he is not deriving any future value from them.
    (Nothing official in this, just my opinion)
  3. hardbastard

    hardbastard New commenter

    Yes but I need the mortgage stuff to be taken into account. I'm afraid the law doesn't see the communal works fees in quite that way - They were slapped onto the property whilst he lived there (he didnt ask for them, nor did I) so he would need to pay his share.
  4. catmother

    catmother Star commenter

    Surely that's only if the property was mortgage free. As they've only bought it 4 years ago,that's probably not the case.
  5. hardbastard

    hardbastard New commenter

    It isnt. 129, 606.83 is still owing as of July 1. Anyone else want to contribute?!?!
  6. hardbastard

    hardbastard New commenter

    It isn't. £129,605.93 is still owing
  7. harsh-but-fair

    harsh-but-fair Lead commenter

    I reckon you 'owe' him half of the deposit, half of the money you have paid off on the mortgage and then a negotiation about a share of the notional increase in value.
    Roughly 10k I make it
  8. doomzebra

    doomzebra Occasional commenter

    So your friend is responsible for £64,802.97 of the outstanding mortgage which, if your girlfriend is also assuming the other half of the mortgage, you deduct from the money you give him.
    The communal works are a contingent liability that exists as part of the leasehold - if your friend is no longer a leaseholder, he cannot be held liable for the ongoing debt - if you all sold up you would not expect to keep repaying that debt on the property.
  9. dande

    dande New commenter

    Would you not need to discharge this mortgage as it is in joint names and then take out a new mortgage with the new partner? What have the mortgage company said?
    Also, with regard to the fees, are these attached to the property or the properties owners? Ask the leaseholder who exactly is responsible?
    I would say that the value of the property takes into account the works that have taken place so he should be liable for his proportion of these. Assume it was not leasehold and you replaced the windows on finance. You would owe the finance company/window company the money regardless and couldn't transfer this charge to the new owner of the house. Again, check what the lease actually says. It may be that the charges have to be paid in full before the lease can be transferred.
    I would ask the new partner to make an offer for 50% of the property, he can then take it or leave it. After which he would have to pay his share of the mortgage off before pocketing any monies.
    This is not likely to be an easy case and it is possible that you may incur some legal costs. Do you have an agreement whereby he covers these as he is the one who is leaving/moving?

    Ultimately, your friend appears to be pulling a fast one demand 50% of the valuation plus the deposit. The was only a percentage of what was paid to purchase in the first place.
  10. doomzebra

    doomzebra Occasional commenter

    Dande makes an excellent point regarding the outstanding amount on the communal fees - ignore my comments thereon!
  11. Dande is right. You will need to change the mortgage. If you speak to the bank they will actually be able to help you - as I know of a similar situation which has been resolved this way. You will need to remortgage in your new joint names. This will enable you to pay him the 77K which he is entitled to (1/2 new value as this includes any deposit and raise in value) and to pay your half of the old mortgage. He will then use the money you give him to pay off his share of the old mortgage. This will leave him with the money he paid in as a deposit, plus 1/2 the rise in value, plus 1/2 the money paid off the mortgage). You are both jointly liable for any communal fees due during your ownership of the property, these cannot be passed onto any new owners - just as you can't pass on your gas or electric bills. Go to an independant mortgage advisor if you are stuck.
  12. Sorry I forgot to say - the mortgage is irrelevent. How you paid for the property doesn't matter he is still entitled to the same amount. The mortgage only matters in that it needs to be paid off when he sells to your girlfriend and a new mortgage taken out.
  13. lurk_much

    lurk_much Occasional commenter

    I don't trust estate agents.

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