Mortgage question

LouOB

A friend of mine is looking to buy out her sister in the house that they both own - this is not a friendly buy out by the way.But she cannot afford to get mortgage if she were to reapply herself.

How much will it be to get here sister off the mortgage? as I was thinking it might be cheaper for her to get loan and buy her sister out.

The value of her house has not gone up to get a 'top-up' on the mortgage

The current mortgage she could repay herself

Any other ideas?

unclebill98

Can you supply some figures???

It could cost a euro...??? Could cost more?

If its a joint mortgage then 50% of the house value.

homer911

Are you referring to the legal costs? She should consult a solicitor. She will also have to take out the top up with her existing mortgage supplier - no bank wants to take a second charge on a property

If you are asking about valuation - have the property assessed by an independent person

The Rooster

LouOB wrote: »

.......But she cannot afford to get mortgage if she were to reapply herself........

........as I was thinking it might be cheaper for her to get loan and buy her sister out......

Those two statements seem to be contradictory.
A mortgage is cheaper than an ordinary loan. If your friend cannot afford the combined monthly payments of both mortgages, then it may be the best option to just sell, and both sisters start again with smaller properties...

If one sister is buying the other out, then two things need to happen. Legal title in the house needs to be transferred and the bought out sister's mortgage needs to be transferred to the remaining sister. So legal costs are inevitable. Also there will be stamp duty on the transfer (payable by the buyer) - though as its a transfer between related parties, the rate will be half the normal rate.

Agreeing a price, between war-ing factions, would usually be a problem! The option that would cause less angst would be if both sisters agreed that the house value hadnt moved. Then your friend would simply pay an amount equal to the original loan and deposit. But even that has complications as one sister might want to include start-up costs like legal fees, furniture, stamp duty (if any) - or the other sister might say it should be the current loan balance rather than the original loan balance.

You could pretend your selling and get three estate agents to value the house (which would be for free), then pick the average. But then that also could cause problems! If you had valuations of €210k, €220k and €250k - the mean avarage would be €227k, but the median average (which I think would be most appropriate but others might disagree) would be €220k. And its the last few thousands difference in values that makes all the difference. And if pay someone to give an independent valuation (probably about €200) you may get a lower price than the estate agents would give. In any event I would be very reluctant to rely on just one person's opinion.

LouOB

At the moment house in area is selling for 325K but house only bought for 320K - therefore no gain if house was sold. If she was to get mortgage on her own plus extra 10-20k as buy out for sister payments would add up to more than existing mortgage as she is getting good rate for the next year.
So, I was wondering if she could get her sister off mortgage - legally and how much?
As it might he cheaper to get loan for say 10k from credit union as might be cheaper in long run.
The situation is better than selling as both would loose their first time buyers status, there would be no profit and both would have to get higher mortgage for less quality house/apts. Where as friend has bought all fixtures n fittings in house ( ie floors, cooker, electrics - the whole chabang where as sister merely pays half of mortgage but contributed nothing to quality)

stepbar

LouOB wrote: »

At the moment house in area is selling for 325K but house only bought for 320K - therefore no gain if house was sold. If she was to get mortgage on her own plus extra 10-20k as buy out for sister payments would add up to more than existing mortgage as she is getting good rate for the next year.
So, I was wondering if she could get her sister off mortgage - legally and how much?
As it might he cheaper to get loan for say 10k from credit union as might be cheaper in long run.
The situation is better than selling as both would loose their first time buyers status, there would be no profit and both would have to get higher mortgage for less quality house/apts. Where as friend has bought all fixtures n fittings in house ( ie floors, cooker, electrics - the whole chabang where as sister merely pays half of mortgage but contributed nothing to quality)

There is only two ways out of this.

A. One sister buys the other sister out with a new mortgage.
B. Sell the house to a third party, pay off the mortgage and split the proceeds / loss.

They already have lost their first time buyers status. Joint borrowers are no different to sole borrowers.

unclebill98

As Stepbar said....

There is no other options here.