Buying out my Mortgage Partner

[WILLOWs]

I am currently in the process of buying my friend's half of our joint owned house. We purchased the house between us at �126k 2 years ago, with a 5% deposit split 50/50.

We have received valuations at circa �160-�170k from estate agents who have valued the house, and I need some advice on what is an appropriate settlement offer to buy my friend out.

Current press appears to be that it is a buyer's market and whilst I want to be fair with the offer, I don't want to be stuck with a property with minimal equity. We recently remortgaged based on a valuation at �145k and took �15k equity out of the property, leaving in �7,500. There is �130k owed on our current mortage.

Look forward to receiving any advice on this.

Thanks.

[PlainJane]

The estate agents have probably told you what they think they can sell the house for, and this may often be on the optomistic side, rather than a true valuation. It may be worth spending a little money and having it properly valued. The valuer who did it for the remortgage may be able to do this for a reasonable payment. Otherwise it is possible to update that value by applying the general increase in values for properties in your area. Nationwide Building Society has an automatic calculator on its web site www.nationwide.co.uk What do you want to do/Use tools and calculators/How much is my house worth.
When negotiating a price it is fair to knock off the notional cost of selling the house, becuse if you were not to buy out your partner, then the house would have to be sold, and this would come out of your pockets, and one day when you sell the house you will pay such costs.
The formula is:
Value of house - Mortgage Redemption Figure - Cost of Sale (estate agents and legal fees),
to work out the available equity on a sale, and then divide this by two to work out their half.