How can we raise the money needed to pay back the third party investor plus keeping our mortgage?

Posted on 17 January 2008

My partner purchased a house 3 1/2 years ago for £180,000. He had a mortgage of £90,000 and the remainder of the money was invested by a friend. We have 18 months left before we have to "give back" the investment money to the friend along with any interest they may have made in the property. My partner's mortgage is now £74,000 and he has been told if remortgaging he could get £114,000. How in your opinion could we somehow raise the money needed to pay back the investor plus keep our mortgage? (we need approx £184,000), I am self employed earning a low wage, which doesn't make any difference to the amount needed.

Dear Ms Robson,

Thank you for your question.  The problem with having a third party owning part of your property, is that you inevitably need to give it back...

Only higher income can qualify for the loan that you need to buy that part of the property from them. If your partner has been told he can only get £114,000, then that gives only £40,000 equity that you can raise to give them.

The answer is that you sell that property and downsize to one you can afford on the equity and income that you have.  The only other alternative is that someone else with a big enough income joins him on the mortgage.  This will make a never-ending circle, however, of you needing another person to own half the property, and you only ever, therefore, getting half the value increase back at the end.

If you do want to look into finding someone who can join him on the mortgage, the combined income between the two of them needs to be about £50,000.

Category: Raising capital out of property, Shared ownership

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