Getting out of a house

billy-ray

Hey, i'm new to this forum but i'm just looking for a little advice on my house situation. I bought a house with a friend of mine a couple of years ago, thinking it would be a good investment, and hoped to maybe sell on for a small profit. Little did i know that the country would fall apart and housing prices would plummet. I'm now unemployed and with no sign of work on the horizon i'd like to get out of the house. I never planned on staying in it for more than 2 or 3 years anyway, and with the 2 years not too far away now i'm looking for some help with my options. Any advice would be helpfull, thanks in advance....

Thoie

I'm afraid the best advice you will get from the internet is "Go talk to a solicitor".

Hopefully yourself and the friend had an agreement drawn up in advance as to what the exit clauses would be.

athtrasna

Be aware that you may be liable for stamp duty if you were to rent out your PPR within 5 years of buying it. Otherwise renting might be a better short term option given the low property prices at the mo.

Senna

athtrasna wrote: »

Be aware that you may be liable for stamp duty if you sell your PPR within 5 years of buying it.

Why???? I think your mixing up selling and converting it to an investment property.



OP, can you answer some questions;
1. Is the other owner of the house wanting to sell up (move) also?
2. How much did you buy it for?
3. When did you buy it?
4. How much is the balance on your mortgage?
5. Is there a similar house for sale in the area? How much is it advertised for?
6. If you both left the house and rented it, would the rent cover the mortgage?

billy-ray

Thanks everyone for your advice, much appreciated...
Senna, We bought the house for 381000 in October 2007 and there's roughly 373000 outstanding on the mortgage. Don't think my friend is really interested in moving and if we rented the house out the rent wouldn't cover the mortgage. Our current repayments are 1771 per month and we would prob get maybe 1200 a month renting. I'm hoping to go away for a year or so with my girlfriend so i'm not looking for a new house any time soon. The fixed rate of 5.2% is up in October too

TwoShedsJackson

Unfortunately you bought pretty near the top of the market - if you have 373,000 outstanding you'll have to either get your partner to buy you out (which he won't do if he has any sense, why would he pay around 186,500 for half a house which is now probably worth around 250,000 if you assume a 35% drop since the peak, which is being VERY generous).

You can try and get him to sell with you, also unlikely, also you will be way into negative equity by now so you will then have no house and owe the bank around 120,000.

Sorry to say but you are basically stuck with it barring some change in circumstances.

Senna

If you did go away for a year, would your friend be happy to rent out your room? Could you subsidies the different from the rent and the mortgage repayment?
Is there a spare room at the moment that you could rent out (other than your own)?

What bank are you with? what rate will you be moving onto once the fixed rate is up? that should bring down your repayments temperately, which might be enough of a drop to allow you to travel and allow the rent from your room to pay your half of the mortgage.

Its a very tough situation and you may have to make tough choices, you may want to go traveling, but you took on the responsibility of a house and mortgage so you may have to just stay and continue paying.

billy-ray

Cheers for your replies.
I'm not sure what rate we'd be moving on to in October, but we're currently with Permanant TSB and more than likely gonna go with a variable rate which would hopefully lower the repayments significantly. If i do go away and rent i still have to come back to a house i no longer want to be in. Would it be possible to just sign my half over to him? He earns 50,000 a year and would have the possibility to rent out the other 2 bedrooms, i'm sure he could afford that, specially if the repayments come down.....

Thoie

billy-ray wrote: »

Would it be possible to just sign my half over to him? He earns 50,000 a year and would have the possibility to rent out the other 2 bedrooms, i'm sure he could afford that, specially if the repayments come down.....

This is where your get out clause that you should have signed back on day 1 comes into things.

Yes, you can sign your half over to him - that doesn't absolve you of the mortgage responsibility. I presume what you want to do is sell your half to him.

There's a few problems with this. First off you can't assume that he can afford it, or wants to afford it. Secondly, as he already has an existing debt (his half of the mortgage), there's no guarantee that a bank will give him another mortgage/topup to take over your bits.

You might think that the "simple" thing to do would be to just sign away your half of the house, and let him keep paying both halves of the mortgage, but that's really asking for trouble down the road. Your name would still be on the mortgage (in case of defaulting), if he lost his job the payment protection would only cover his side, and you would still be liable for the rest of the monthly payments (even though you now technically don't own any of the house). If either of you die it opens up inheritance problems. You really need a solicitor to do all this problem, as there an enormous can of legal worms just waiting to wriggle their way around this.

I really really hope that ye did sort out an agreement up front. You're going to have to talk to him about this soon, and both of you need to go to a solicitor and see where you stand.

Senna

billy-ray wrote: »

Cheers for your replies.
I'm not sure what rate we'd be moving on to in October, but we're currently with Permanant TSB and more than likely gonna go with a variable rate

Check your mortgage agreement you could be moving onto a tracker rate, if you are, dont let them sway you away from it.