Covering mortgage, look to buy out my sister

Hi All,

I purchased a house 9 years ago with my sister and I'm looking at buying her out.

I am currently living there with my wife and we make 100% of the mortgage payments.

It sounds like a longshot but if we can demonstrate to the bank that nothing will change, payments will continue to be made would they agree to simply swap the name on the mortgage and deeds from my sister to my wife? Or would they insist on re-financing everything?

I would separately agree a price with my sister to buy her out, but I would assume that the bank wouldn't get involved here.

Mortgage is with EBS, house is about 10-15K negative equity so could well be in positive equity in the next 6 months based on current mortgage payments and house price increases in the area.

You will have to show that your wife and you meet the affordability criteria. If you do, they will give you a mortgage. If you don't , they won't.

Are you on a cheap tracker? They might try to get you to surrender that.

It's not simply a question of changing names. Your wife will have to do a conveyance and buy out your sister's interest. There will be legal fees and 1% stamp duty.

Brendan

Thanks Brendan,
Not on a tracker unfortunately, am fixed until end of 2016.

Given the circumstances is there a way to work out the cost of doing this? Even if it just gives a rough indication of the final cost? For e.g. the 1% stamp duty, what is that calculated against?

Thanks

Hi Fast

Check your mortgage documents to make sure you are not entitled to a tracker on expiry of the fixed.

The 1% will be on the value of the property. If the house is worth €200k, then your sister will be selling €100k worth, so 1% stamp duty will be payable.

The legal fees will be around €1.5k each for both the seller and the buyer - very rough guess.

I don't think you will be able to do anything about it until the fixed rate period ends. By all means ask EBS, but I suspect that they will treat it as paying off a fixed rate early and will impose a fairly severe penalty for it. It may still be worth doing, but is it urgent?

Brendan

Hi Brendan,

Not urgent, although having her name attached to the house probably won't do my sister any favours if she wants to buy her own place

The fixed rate was only taken out last year for a 2 year period to take advantage of the lower rates EBS are offering at the moment for fixed. The tracker ship sailed a long time ago! It was the usual story of being too young and not understanding the different mortgage options at the time.