buying out my partner - can I hold onto the tracker?

A

awnree

Guest
Hey,

I haven't seen any other postings which describe my situation... but in a nutshell, here it is.

I bought a property with a friend (50-50) back in 2006. At the time we signed up for a tracker mortgage with AIB.

My friend now wants to sell his half of the property, and I have agreed to buy his share. I'm wondering if anyone has tried to do this, while still managing to hold on to their "tracker"?

i.e. keep the current mortgage in place - with his name removed, and get a separate mortgage for the balance.

If anyone has any advice which would help me out with this I'd appreciate it...

Thanks !
 
You wont be able to hold onto your tracker, the bank will treat it as the house being sold by you and your friend, mortgage paid and closed, and a new mortgage opened in your name.
 
You also need to consider does the property have negative equity (quite likely if bought in 2006) and is your friend going to pay his half of the neg equity. Also is the bank even likely to give you a mortgage yourself, there are many threads lately where people have not managed to buy out a friend / ex partner because the bank would not let them take over the mortgage.
 
Its not in negative equity no, as we put quiet a bit in when we bought the place in 2006. Obviously we've both lost a substantial amount off the value of the property in the mean time.

The reason I asked, is because someone i know, who when she separated from her husband she took over the mortgage on the family home. She just had his name removed from the deeds, mortgage etc. Then took out a new mortgage for the additional cost of her ex-husbands share. This was back in the mid-90s.

I was wondering if anyone has tried this approach? ( And been successful? )
 
I think in the case you mention, it sounds slightly different. It could be that the husband "gifted" his half so there was no sale as such. That brings in other issues about the value of the gift etc.

However, in your case I think it would be handled as a separate transaction and so you may well lose the tracker. I'm not 100% certain, but there could also be stamp duty to pay too.
 
I'm not sure how it could be classed as a gift, if he received payment. I'm pretty certain that wasn't the case. But there might be something in investigating that avenue...

No stamp duty applies, as we were both 1st time buyers when we purchased, and I'm still resident etc. (I've checked this out with a solicitor).

Thanks for your responses btw...
 
You will lose the tracker.
Effectively you are remortgaging - your new mortgage will clear the old mortgage. You could stick with the current bank or move to another lender for a preferential rate.

There are three problems with your scenario, though:
1. It's extremely unusual to have two mortgages against the property. The only case is in the event of a top-up. And you could not do this, since the top-up must be in the same names as the original mortgage (which has you and your friend on it).

2. As other posters have already pointed out, you should consider the fact that a bank might not lend you the funds you need to take over the entire mortgage.

3. You say your friend wants to "sell his half of the property" - will this mean he can clear his half of the mortgage, too? For example, if property is worth 100,000 and mortgage is 50,000, you will buy out your friend for 50,000 which is half the value of the house. Presumably you don't have 50,000 in cash since you said you need to get a mortgage for it? This means the mortgage will increase to 100,000 (original 50,000 plus the new 50,000). A bank won't lend 100% of the value of the house, so you'll have to come up with at 8% (for a 92% LTV) from your own pocket - not a loan.
Obviously this is not a problem if the value of the property far exceeds the mortgage (ie by more than 50%).
 
Be very careful here. You have to consider that your tracker mortgage contract is effectively a valuable asset to you both, that, by some calculations could be worth as much as 20 to 25% of the value of the loan.

For example if your mortgage is for 200k, you would need approximately 50k sweetner from the bank to persuade you to come off the tracker onto a higher rate.

For someone to actually do that by choice, you need to have a very good reason.

Do the sums, and build that impact into any decision you make.
 
If you qualify to keep the existing mortgage then you should be able to get your friends name removed and get the mortgage in just your own name and keep your tracker. Check the procedure with your lender.

I know someone who did this with Haven Mortgages (EBS) after a relationship breakup and they kept their tracker.

You should then be able to apply for a topup on the mortgage to get the balance you need.
 
@Tailspin.
Yes, I'm doing everything I can think of to keep it. Its the other persons decision to pull out, regardless of whether it makes sense or not. Trust me, I've tried my best to convince him otherwise... But he just wants what's left of his initial capital back.. and that's that.

@Stephen Red
Yes I do qualify to keep the existing mortgage... I hope AIB are as amenable to keeping the Tracker as EBS in the case you mentioned.

Thanks again folks for the advice / info !
 
awnree said:
I hope AIB are as amenable to keeping the Tracker as EBS in the case you mentioned.

Thanks again folks for the advice / info !
Click to expand...


I can’t see why the bank would let you do this, they are loosing money on these low trackers.

Stephen Red was the EBS case you referred to recent ?

Any bank would be very pleased to get this money back and lend it at a standard variable rate.

This wouldn’t stop me asking though.

Would be interested to hear the response you get.

Good luck.
 
Hey...

I know it was a few months ago... but just in case anyone was interested, I managed to hold onto my Tracker, and get a new mortgage to cover the balance.

The 1st person i talked to in my local AIB branch told me it just wasn't possible. Not wanting to give in, I rang back later and got through to someone else who also told me it wasn't possible. This time however I explained I knew someone who had done this previously and that I had been advised that this is the way I should proceed, and would they mind following up on it with their home-loan dept with a precise explanation as to why they wouldn't do it. I asked them to send me this in writing. They got back to me within a couple of hours telling me I could keep my tracker.
 
Awnree

That is a very interesting story. Well done for persevering.

Has the deal gone ahead yet?

Can you explain exactly what happened and maybe give the numbers as it will be useful to other people in similar situations.

Property value €300k
Joint mortgage : €200k
Tracker rate ecb + 1%

Friend's equity €50k.

Did the bank just allow you to take your friend's name off the mortgage?
You did a conveyance of his half of the house into yours?
It would have been subject to stamp duty, but may have been below the threshold.
 
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