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Buying out co-owner in a house

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  • 02-05-2017 7:41pm
    #1
    frawley2005
    Registered Users Posts: 58 ✭✭


    Hello looking for advice on small mortgages of 50-55k to buy out a co-owner in the house i own. The only loan i have out is a small 3k personal loan from the credit union that i have been paying back for 2 years now and i have 900 saved in the credit union i make roughly 30k a year which includes Family Income Supplement...
    Any advice given would be appreciated thank you.


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    #2
    harr
    Registered Users Posts: 4,485 ✭✭✭harr


    Is the 900 your only savings ?


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    #3
    frawley2005
    Registered Users Posts: 58 ✭✭frawley2005


    I have been privately paying the other owner for 7 years and have paid them 20k myself as the property was valued at 150 and i agreed to pay half ... at the moment i only have the 900 plus 300 in a savings account with ulster bank.


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    #4
    van_beano
    Registered Users Posts: 1,345 ✭✭✭van_beano


    Is there a mortgage on the property at the moment? Are the deeds of the property in both yours and the other persons name?

    You'll need a couple of thousand euros more than the half value of the house when you take into account legal expenses etc.


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    #5
    frawley2005
    Registered Users Posts: 58 ✭✭frawley2005


    No mortgage... house is in both are names i know i need to save more ... just thought id ask here for advice on what or where to go... first :-)


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    #6
    Blazer
    Registered Users Posts: 17,434 ✭✭✭✭Blazer


    frawley2005 wrote: »
    No mortgage... house is in both are names i know i need to save more ... just thought id ask here for advice on what or where to go... first :-)

    And you're obviously getting receipts for this?


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    #7
    frawley2005
    Registered Users Posts: 58 ✭✭frawley2005


    I have bank statements and im on good terms with the co-owner


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    #8
    van_beano
    Registered Users Posts: 1,345 ✭✭✭van_beano


    frawley2005 wrote: »
    No mortgage... house is in both are names i know i need to save more ... just thought id ask here for advice on what or where to go... first :-)

    I'd say first get the house property re-valued again as your other one sounds like it's 7 years old. The house may be worth more or less than the €150k. Approach a mortgage broker or bank with the view for getting a loan of half the value, see if you'd be successful in getting mortgage approval. If everything falls into place then get a solicitor to do the conveyencing for the property.

    In relation to that €20k you've paid privately to the co-owner..... I'll just say I hope they acknowledge ithe payments and don't pull a fast one on you.


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    #9
    harr
    Registered Users Posts: 4,485 ✭✭✭harr


    I know you say you have bank statements in relation to payments to other owner...but have you an agreement in writing saying that these payments are in relation to buying his portion of the house..if not he could say the payments were for anything really...
    If you have documents saying you have paid him 20 grand already that should stand to you when applying for a mortgage...
    Why not stop those payments now and put them into savings making it easer to possibly getting the mortgage..I doubt you will get a mortgage based on those savings...as mentioned speak to a broker and they will put you in right track.


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    #10
    xper
    Registered Users Posts: 1,069 ✭✭✭xper


    frawley2005 wrote: »
    I have bank statements and im on good terms with the co-owner
    I'm afraid "im on good terms with the co-owner" is not going to cut it with a lender. They are going to need some form of documentation with legal weight that makes it clear that these 'private' payments made from you to the other owner of the property are going to count towards buying out their share of the property. It is sort of the opposite of a gift letter.

    The current validity of the valuation is also a concern. If its several years old and the local market has gone up since then if you both agreed to continue on the basis of the old valuation, your co-owner would be effectively gifting you half the difference which could open you up a tax liability!

    Regarding an outstanding loan, generally only if there are absolutely regular direct debit/standing order payments being made each month to pay it off and there have been zero missed payments then a lender may approve a mortgage application if they calculate that you can afford the stress-test level mortgage repayments on top of the loan repayment.
    In your case, you are going to have enough hassle explaining your payments to your current co-owner so I wouldn't approach a bank before that loan is paid off. It'll just be their easy excuse for saying no.

    As others have said, you should talk to a broker. A good broker will know how to put together the information that the bank will require. You may also end up talking to a solicitor before approaching a bank as well.


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