Can I buy out a portion of someones house?
Discussion
Assuming you have a mortgage balance outstanding on your own property, you'd probably be better off using the £15k to reduce your own mortgage? (appreciate that's the selfish view to take and doesn't help your mate).
If your mate has no way of raising the money to pay off his ex now, in the long term how does he expect to repay you? Are you suggesting he'll be relying on re-mortgaging at a later date for the increased amount? (so what change in circumstances will result in that being approved compared to now?)
£15k is a lot of money to have tied into someone else's property - if you needed it back urgently you might be put in a position where you had to force your mate to sell the flat?
If your mate has no way of raising the money to pay off his ex now, in the long term how does he expect to repay you? Are you suggesting he'll be relying on re-mortgaging at a later date for the increased amount? (so what change in circumstances will result in that being approved compared to now?)
£15k is a lot of money to have tied into someone else's property - if you needed it back urgently you might be put in a position where you had to force your mate to sell the flat?
This has disaster written all over it. However . . .
His mortgage co., won't let you do what you propose, you'd both need to take out a new joint mortgage and pay all the fees associated with this, including likely paying stamp duty, at the higher rate as it'll be a second home for you.
I'd have thought it far simpler that you lend him the money and take a second charge over the property.
His mortgage co., won't let you do what you propose, you'd both need to take out a new joint mortgage and pay all the fees associated with this, including likely paying stamp duty, at the higher rate as it'll be a second home for you.
I'd have thought it far simpler that you lend him the money and take a second charge over the property.
PistonBroker said:
Agreed, second charge sounds most obvious.
Problem is they take a back seat behind his existing mortgage. I will never get my 15k back if I do it this way, he would just be paying me interest on it. I want some collateral in ownership of the house. Having spoken to my solicitor and mortgage guy today we will have to wait until the end of their mortgage term in November anyway.I would like to buy a 15k stake in the house with the associated equity, or buy half of it and he rents half back to me at a reduced rate.He has to see if his partner will wait until November to avoid early exit charges of his existing mortgage.
I will then have to pay a portion of stamp duty I believe to buy half. Which is fine, it is not an expensive property.
supercommuter said:
Problem is they take a back seat behind his existing mortgage. I will never get my 15k back if I do it this way, he would just be paying me interest on it. I want some collateral in ownership of the house. Having spoken to my solicitor and mortgage guy today we will have to wait until the end of their mortgage term in November anyway.
I would like to buy a 15k stake in the house with the associated equity, or buy half of it and he rents half back to me at a reduced rate.He has to see if his partner will wait until November to avoid early exit charges of his existing mortgage.
I will then have to pay a portion of stamp duty I believe to buy half. Which is fine, it is not an expensive property.
If you do what you're proposing you'll still be taking a back seat behind the mortgage co. The 2 options:I would like to buy a 15k stake in the house with the associated equity, or buy half of it and he rents half back to me at a reduced rate.He has to see if his partner will wait until November to avoid early exit charges of his existing mortgage.
I will then have to pay a portion of stamp duty I believe to buy half. Which is fine, it is not an expensive property.
Buy Equity
Mortgage Co. has first charge, you and mate jointly have second charge
Lend money
Mortgage Co. has first charge, you have second charge, mate had third charge
Lending him the money puts you in a stronger position to get your money back should it go wrong.
If you're a co-owner, why do you think you'll be in any stronger position to get your money back then having a second charge? If he doesn't want to sell, it will be expensive to make him.
If you're a co-owner I presume you'll be happy paying your share of all maintenance and insurance costs for the property? How do you agree what repairs need doing and what don't?
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