Last year my daughter bought a house with her cousin. Her cousin has now decided she wants to sell and my daughter is thinking of keeping the house on herself. We are not sure how it works. They have had the house valued, one agent valued it at £99000 and another at £96000. They bought the house for £91000 and owe £90000 on it. If they sell they will have redemption penalties of about £2500 plus solicitor and estate agent fees etc to pay. The profit they have made depends on which valuation they take. If they sell at the higher price they will probably have approx. £1000 - £1500 left each, but if my daughter wants to buy her out will they still need to take redemption penalties into consideration or will these not count? Her cousin is saying she wants at least £4500 but I have a problem with which valuation they use because obviously the lower valuation will be better for my daughter and the higher one for her cousin and I think they should either get another valuation or meet somewhere in the middle. It is difficult to get onto the property ladder these days and if possible she would like to keep the house. It is a legal minefield at the moment and people are giving conflicting advice. She needs to speak to a solicitor asap but in the meantime any ideas????
jane

It is a legal matter and given the huge difference in their opinions of what each should have I cant see they will be able to settle it very easily.  The easiest way to get a name removed is a remortgage but as you say the penalties will then wipe out any profit either may have made.  I believe you can get one person taken of the mortgage but you will need a solicitor for that also, or you can read up on how to do it yourself just as you can buy a house yourself without a solicitor - but I wouldn't recommend it.

I am guessing that the mortgage is relatively new, penalties involved, could they not rent it out and wait for the equity to build?  This is what I did when my son moved back up North and the family home was purchased in both our names.  When we sold it we made a nice profit and in the meantime did not have to pay a mortgage because the tenants did this for us.  Incidentally you should let your mortgage company know you are doing this but lots of people don't so it is entirely up to the individual.

Just an idea.

Does your daughter have enough income to allow her to accomodate the full mortgage?  I am in a bizarre situation of having my ex husbands name on my mortgage account and am under instruction from the court to 'use my best endeavours' to remove it but I do not earn enough money in the eyes of the building society to have sole responsibility for it, even though I've paid it since he disappeared nearly 8yrs ago!  I am the sole owner of the house.  The rough rule of thumb is 3 times her income so she would need to earn in the region of 30k.

Get her to speak to her building society.  If they have a good payment history behind them, they may get a good hearing.

Hi Echo, :-)

Forgot to add on the DIY conveyancing comments , 2 points to this , firstly this can only take place in England and Wales  and on in areas in England and Wales where the land register is fully in place and whilst it is procedurally posssible most lenders will not entertain DIY conveyancing at all. 

Has she called the current lender? They may be willing to remortgage with no penalties due to circumstances. Another option might be to take out some equity on the house to get the pay off money, then ask the lender if they would change the name on the loan to just her. There may be a small fee but that's better than the redemption penalties. A young woman I work with just went through this when she split up with her boyfriend. It was her first purchase too and she really didn't want to move. They just looked at her earnings and said no problem. They would just issue a new. larger mortgage to her so she could buy him out. No penalities at all.

As for the value, I'd think splitting down the middle would be fair. Or getting another valuation or two and averaging. The cousin must remember that valuation does not equal sales price. Unless the market is very hot in the area it will sell for less (minus all the fees etc.) I wish your daughter luck with this.

I agree with Lori, the cousin must realise that expenses need to be paid first. She is the one who wants to change things, so she can't really expect more than her share.

Jackyjat, my ex-husband was in the same position as you are now.  He showed the mortgage company all his paperwork and proved he had been paying it alone for years and they did allow him to take my name off (mutual decision between us I add).  If you continue paying it and leave ex's name on there is nothing to stop him claiming half of whatever the equity is when you eventually come to sell it!

You will only know what charges will apply when you talk to the bank. Generally if you remortage with the same bank OR have the name removed of the other party no penalty charges take place just admin charges.  It isn't just as straight forward as removing the cousin this needs to be done through the solicitor generally because the title must be altered at the land registers.

Alexanders in response to your comments, there is everything stopping ex claiming half because the court awarded me sole ownership of the house. My name only is on the deeds however,  I can't take his name off the mortgage because I don't earn enough to have a mortgage that large although that is a bit of a mockery because I pay it anyway!

If the young lady in question doesn't have a large enough salary to cover the whole of the mortgage it could be difficult.

I didn't realise only your name was on the deeds.  I think that is the important bit anyway (could be wrong).  Even so, my Ex didn't earn enough to cover the mortgage according to the mort. comp., but when he proved he had been paying it for years they took my name off.

Thanks for all your replies. My daughter has spoken to the building society and they have explained the procedure. They are posting the relevant forms for if she decides to proceed. I am hoping that they are able to sit and discuss this and come to some agreement although her cousin does not like doing this and avoids her at all costs making it very difficult to pin her down. My daughter is not sure whether this is financially viable for her and was only asking her cousin to see how she felt about it so that she could look into it properly. Originally her cousin was just wanting to get rid and even wanted to leave the house furnished (nothing in the house is more than 12 months old), now she is taking her share from a price that they will not get for the house and has told my daughter that doesn't include the furniture. My daughter knows she will have to make some payment but I think she is hurt that her cousin sees this as a way to try to make money from her. She is very upset and I think she may agree to sell to prevent any bad feeling between them in which case neither of them will come out with anything anywhere near what her cousin is asking for. I think my daughter has learned some painful and costly lessons and I feel sorry that they have both worked hard and will be left with virtually nothing.
jane