I bought a house 8 years ago with a girl. We have a cohabitation agreement which states I will pay 2/3 of the mortgage and she will pay 1/3, but our bills are split 50/50. If we split up I am entitled to buy her out, but if neither can buy the other out we can sell up with 2/3 coming to me and 1/3 to her. The original value of the house was £72,500, it is now worth £175,000. I want to try to buy her out so I figure the following:
Increase in equity = @£100,000 of which she is entitled to £33,000
Current mortgage value = @57,000
That means I need to try to get a new mortgage for @£90,000 is this correct?
If it is assumed I have good credit history, no outstanding loans apart from the existing mortgage, what kind of salary ( before tax ) do I need to be earning to be able to get £90,000?
If it makes any difference, I part own another house, which is in England, but for different reasons I can't sell this house to help buy out for this house I live in
Thanks
2007-01-27 06:05:23 · 3 answers · asked by Stephen 3 in Business & Finance ➔ Renting & Real Estate
No. She gets more than that.
175 - 57 = 118
118/3 = $39,333 That's what she gets.
So you need a loan for 57 + 39.333 = $96,333
2007-01-27 06:30:22 · answer #1 · answered by teran_realtor 7 · 0⤊ 1⤋
Hold your horses! How do you know it is worth 175,000? It could be more or less. Valuation is NOT an exact science.
Above is correct, it would appear that she would be entitled to 1/3 of the principle that has been paid down in addition to the equity growth.
Last, (I don't know the laws in England) but I would suggest you consider giving her a second mortgage for her interest in the property, and simply pay her monthly. Might save you a tremendous amount in refinancing costs and closing costs.
2007-01-27 23:26:04 · answer #2 · answered by stevegreen 1 · 0⤊ 0⤋
Don't buy a house with Teran. LOL.
Don't forget to include the costs of purchasing the home, and the cost of refinancing. If she wants to get paid out, she should bear at least half the cost of the refi, if not all of it.
$90K financed over 30 years at 6.5% is only $570/mo. Assuming tax, insurance, etc..., maybe $750-800/mo. total payment? You should only need to be making maybe $2000 per month to get this loan, possibly as low as $1600.
I realize I'm using dollars, but they don't know they're really meant to be pounds.
2007-01-27 17:43:45 · answer #3 · answered by Anonymous · 0⤊ 0⤋