What happens if you agree on a joint mortgage but years later decide to part companies? This often happens with family members and sometimes with friends. You decide to get a mortgage because it’s more cost effective to join forces with a sibling, parent, family member or friend. You co-habit the property but decide it’s time to move on. There’s no conflict but you do need to involve a property lawyer to help both parties keep things legal.
Once you get the property value and measure it against the mortgage owed, then you need to understand your options. This can be an amicable parting of companies and a lawyer will not interfere with the dynamics of the relationship. A property lawyer/solicitor can act for both parties, in this case, with no conflict of interests.
There are options available and these will be laid out on the table by your lawyer. For instance, part of the property value can be transferred. If you party gives up a share of their ownership rights but keeps a stake or ‘interest’ in the home. This means that when it is sold they will receive a percentage of its value. But this needs to be decided with the expert advice of a property lawyer. It also needs to be written down in a legal document.
One case scenario is a buy-to-let property. A mortgage might be divided into two loans and a business loan. If both parties apply for a loan to cover a mortgage and a business loan, two thirds of the loan is for the mortgage and one third is for the property’s commercial purpose. You get a business loan to invest and a mortgage to buy-to-let and get a return on your investment.
So you’ve made enough profit and now want to move on. Either your business partner buys you out, or you buy your partner’s share, or you both sell and split the equity. You will need to consider the joint loans – business loan and mortgage. The equity split is based on the sale of the property.
Have you and your partner bought a property as an investment and are now ready to move on? We can offer friendly, personable, expert advice. Please give us a call and arrange an appointment to discuss options and the best way to move forward. SG
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