Guidance on closing a joint mortgage

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litecube

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I purchased a house in 2006 with 2 others and I would now like to remove myself from the arrangement by either selling or by purchasing the property outright.
The outstanding mortgage debt is greater than the current equity.
Mortgage is tracker and is being serviced.
The other two parties are open to selling, however one is advising that they do not have the cash available to pay 1/3 of the outstanding debt (after sale price agreed). I am also a little concerned over their personal financial situation.
Does anyone have any experience in a similar situation or any guidance that could be offered in terms of best way of managing my way out of the above with the bank.
I am not looking for any debt write off, simply to remove myself from this arranagement.
Thanks
 
litecube said:
The other two parties are open to selling, however one is advising that they do not have the cash available to pay 1/3 of the outstanding debt
Click to expand...

Then your only option is to take over the property. And probably let him off the debt. But you'll also have to persuade the bank to allow you to take it over and to let him off. Very difficult to do if not near impossible.

Who is paying the mortgage?
 
Thanks Bronte,
The mortgage repayments have been made continuously by all three parties involved, each paying 1/3. No arrears.
I just wish to find an exit route minimising my exposure to taking on any debt from other parties now or in the future, should status quo remain. Bank has advised that transferring equity to the other parties and removing my name would mean a new mortgage for the remaining two parties and I have concerns that they would not obtain the new mortgage.
 
What do you mean transferring equity to two parties, there is no equity only debt.

How about you give us the figures, property value, mortgage, presumably you all put in the same amount initially so it's 'owned' 3 ways. Also what is the term of the mortgage remaining.

In relation to the mortgage debt of the other two, if one of them defaults you will be liable for the full amount, each of you individually have signed up to the total amount, not 1/3rd of the mortgage.
 
Hi Bronte
One option I looked at was that I move to remove my involvement from the property by signing any rights over to the remaining two parties and then paying my 1/3 of the debt. However this is not a viable option.
Outstanding balance: 120k
Current value: 50k
term remaining: 10 years
tracker
Thanks again
 
So the NE is 70K or about 23K each.

You were planning on paying I presume 23K, which is your share. Who were you going to pay this to? And that person/s would take over the your share of the mortgage? Are either of your two partners willing or in a position to take over the mortgage?
 
They would be willing to retain their share of the mortgage. For them, little would change - it would just mean two people involved as opposed to three.
I am in a position to pay the 23k in cash. However bank advise that this would become a new mortgage application and I do not believe the two other parties could do this.
As mentioned earlier, I am looking for a route out of this agreement.
Thanks again
 
You'd want to check whether you have a "joint and several liability", so even if you discharge your 1/3, if any of the other parties defaults, the bank can still come after you.

I'd say there are loads of situations like this in Ireland. Friends and siblings buying apartments together just to get on the property market, make a profit and then go your separate ways. Unfortunately, it hasn't worked out like that.


Steven
www.bluewaterfp.ie
 
Hi litecube

You will find a systematic approach to your question here:

A guide to splitting up when in negative equity

If the other two are paying and there are no arrears, why do you want out?

With only 10 years to go, you will exit negative equity in around 4 years or so, assuming prices don't rise or fall from the present level.

The fact that it is a tracker, means that you have probably got a very profitable investment. The rental income should be covering at least the interest.

The lender won't give your partners a mortgage, so they can't buy you out.

You should not take over their share of the negative equity of €46k unless they pay you to do so. Presumably they can't afford to do this.

Even if you could take over their share of the mortgage, it's unlikely that the lender would allow you to keep the tracker, so the repayments would rise.

Brendan
 
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