Joint mortgage with family

[biomed86]

Hi all,

I wonder if anyone could give some advice please on mortgages/buying a house with family.

My brother and I currently live at home with our parents in their home which they have a mortgage together on.
Their mortgage is for about £270,000, but then also have a second mortgage/secured loan for £100,000, giving them a total debt of £370,000.
My understanding is that the rates on the second loan are so high that it has made the whole thing less affordable for them.

The house was recently valued at £395,000, with the potential for £410,000 with some renovations.

My brother and I would like to get on the Property ladder and wondered if it is possible for the 4 of us to take out completely new mortgage agreement to buy the property together, with the hope of hopefully reducing the payments my parents have on their mortgage and secured loan?
So basically mortgage for say £400,000 then using the money to pay off the current mortgage provider and the balance on the secured loan, using some of the remainder to renovate, and then having a joint mortgage with one lender.

I hope the above makes some sort of sense! I wasn't sure if something like this would be possible.

If anyone could shed some light on the situation that would be great.

Many thanks!

 

[businessfunding]

Whilst I am not up to speed with the residential mortgage market, I would suggest that you would not get anywhere near 100% LTV - about 80% would be your max.

Other benefits would depend mainly on when the prior loans were taken out

Rates are now higher than they were 4 years ago.

Also, if the mortgage was self cert, that no longer exists so you would need to prove sufficient means to repay

 

[biomed86]

I presume by proof of means to repay do you mean like payslips etc? We are all in full time employment with a joint income of approx £130,000.

So possibly up to 20% deposit would need to be paid upfront? We were hoping for 10%

Anyone else out there who could offer more info?
My google searches don't seem to be returning too much. Hopefully will be meeting with an advisor soon.

 

[Rippic]

Hi there, I have been involved in the residential mortgage market(i was a mortgage broker) and sadly its is very unlikely you will be able to re mortgage purely on the loan to value (LTV).
In answer to the other part of your question it is possible to have four applicants on a mortgage application and different lenders will view it different ways. If you parents are struggling then I would suggest you have two options, If your parents do not wish to sell the house and they are struggling to pay the mortgage then perhaps the only option is to have a mortgage valuation done on the property(not an agents) and you and your brother make an agreement to pay a percentage of the mortgage until the market improves(it will but when is the big questions) then re finance into cheaper finance or sell splitting the difference in value between original value and value at time of sale.

Alternatively get your parents could check whether their original mortgage is portable, if it is sell the house and buy something cheaper therefore reducing the amount of mortgage(hopefully getting rid of the 2nd charge) retaining a smaller mortgage with the original lender.

Feel free to contact me privately if you think I can be of any further help.Hope it all turns out ok.

 

[Rippic]

Just read your reply saying you have a joint income of £130k , the first thing a lender would ask is if you have this amount of income why cant you come up with more deposit?.

 

[biomed86]

The income is before tax, so take home is substantially less. My parents' joint income mostly goes towards all their repayments so they haven't been able to save much at all, their only investment really is the house. Then from myself and my brother's point of view, it would still take a long time to save if 20% of £400,000 on ur own. I've just moved back in to try and save some money, so previously about half of my pay cheque went to rental payments. We have saved, but £80,0000 is a hell of a lot to save considering we've both only been working for 2 years.
Would that be a good enough answer for the lenders? It's the truth!

My parents really don't want to sell, that would be the very last option.

 

[tony84]

Hi,

If the current value is £395k, the most you would be likely to get is 85% (Approx £335k).

This obviously isnt enough to clear all of the debt but it would be enough to vastly reduce the secured loan. However.... that doesnt mean your payments will go down.

If your parents are on a tracker or standard vriable rate for the main mortgage, it may mean its on a lower rate than you would be if taking out a new mortgage.

The other issue is that there arnt many lenders who would allow 4 applicants on 1 mortgage AND for them to be parents/kids - theyre usually aimed at 4 friends getting on the property ladder.

That doesnt mean its impossible as its not something ive ever had to look into, so i couldnt be 100%.

The good news is that affordability wise you would walk it.

Im not sure why you would want to go on the mortgage though, why not just contribute something towards the bills? Chances are once your on the mortgage you wont be getting off unless they sell the property... which could scupper your chances of getting your own mortgage later on down the line.

Its not really for me to comment, but if your parents are struggling to meet all of their repayments, it sounds like theyre over-stretching themselves, usually when thats the case its best to be realisitic and maybe look at downsizing/downgrading.

If you do decide to go on the mortgage and press ahead with it, i would speak to a solicitor and a mortgage broker just so you and your parents understand all of the pros and cons, ive only mentioned a few of the more obvious ones on this post.

 

[biomed86]

Thanks for the above post very informative.
The main reason we were thinking about a new mortgage was to see if that would help bring the payments down, by consolidating the current mortgage and secured loan.

We both contribute to bills but unfortunately my parents are really quite stubborn and don't like accepting much in the way of say rent, until we started wondering if we could get a joint mortgage.

I take your point about The future for me and my brother wanting to take out mortgages later - definitely something to think about.

In terms of downsizing, also something to think about. I think their problem is the secured loan- this has bitten them, if we could just get rid of that or reduce the payments on it they'd be fine. Thankfully they are struggling to make the payments it's more that it doesn't leave too much left each month for their enjoyment!

Thanks for all the advice received!

 

[Rippic]

Probably daft to ask this but have you spoken to the original mortgage lenderabout your proposal?. It's probably not going to help but its got to be worth asking the question.

Purely out of interest who is the secured loan with?.

Really hope you all get through this difficult time. Just keep in mind that property will go back up in value so if your parents have to stay and struggle at least when it does go up they will be getting a % of a 400K rather than a 200 k property so they will gain more equity in the end.

Vest of luck! .

 

[businessfunding]

P

Really hope you all get through this difficult time. Just keep in mind that property will go back up in value so if your parents have to stay and struggle at least when it does go up they will be getting a % of a 400K rather than a 200 k property so they will gain more equity in the end.

Vest of luck! .

It will go up in value, but it might well go down first. I'm not saying this to scare-monger, but to open the thought that it might well be cost efficient for your parents to sell, rent and buy another, smaller property in a few years.

The only thing I would question here is age and whether they will still be working in a few years.

 

[andygambles]

Have you thought about letting the property and moving somewhere smaller even rent that?

Around here there is a demand to rent large properties but none really available. The rent could pay the mortgage until the situation improves.

You may need consent to let from the current lenders but if you are honest and show this is how the repayments will continue they will probably be OK with it.

 

[puffin]

If you are earning what you say you are, there should be no reason at all why you can't save a good deposit.

 

[andygambles]

If you are earning what you say you are, there should be no reason at all why you can't save a good deposit.

It's £32k a year each. It will still take a while to save up a decent deposit as well as live.

 

[puffin]

It's £32k a year each. It will still take a while to save up a decent deposit as well as live.

Where are you getting £32k from?
It's more closer to £40k after tax.

 

[biomed86]

Where are you getting £32k from?
It's more closer to £40k after tax.

It's nowhere near 40k after tax. 2 of us earn 40k before tax, the other 2 earn 25k before tax. As I mentioned earlier 130k is the joint income of the 4 of us before tax.

 

[Talay]

It is amazing how little you can live on if you are sufficiently motivated but most people just cannot cut out all the little treats and luxuries to get anywhere near the maximum saving potential.

 

[biomed86]

It is amazing how little you can live on if you are sufficiently motivated but most people just cannot cut out all the little treats and luxuries to get anywhere near the maximum saving potential.

Definitely cutting out the luxuries here. Bro and I have been saving as much as we possibly can, but it is not possible to save 80k after only working 2 years on salaries that don't even add up to 80k. If you know a way please tell! As for the rents, most of their income goes on mortgage and bills. They have savings but their main investment is the house, hence why my brother and I want to help them so they don't have to sell.

 

[tony84]

Your parents can be as stubborn as they like but if they allow you to go on the mortgage, its actually quite selfish - theyre doing you more harm than good. I would definately suggest you dont do that. Is the house really worth them not being able to afford things they want?

If your paying some sort of rent and thats not enough then at some point they have to see the light. What happens in say 3 years when you manage to save a deposit and move out? Can you move out or will you feel like you have to stay there?

 

[biomed86]

Your parents can be as stubborn as they like but if they allow you to go on the mortgage, its actually quite selfish - theyre doing you more harm than good. I would definately suggest you dont do that. Is the house really worth them not being able to afford things they want?

If your paying some sort of rent and thats not enough then at some point they have to see the light. What happens in say 3 years when you manage to save a deposit and move out? Can you move out or will you feel like you have to stay there?

The initial thought/idea was something my brother and I came up with so I wouldn't say my parents are being selfish at all. They keep refusing to accept rent, but we feel bad as we can see they could do with the help, hence trying to think of ways to contribute and at the same time we thought it would help us get on the property ladder.
They make all their payments fine and on time, but I guess they are getting older and my brother and I can't help but feel like they need a break, treat themselves a little etc. they complain very little, and just carry on as they always have. I suppose you could say we were away from home, have come back to live with them for the past year and just really want to be kind and help out.
When we put the idea to them they thought it sounded ok but wanted us all to get all the correct info and advice. So we've set up meetings with a solicitor and mortgage advisor so we can have all the facts. They'd only go ahead if we're happy otherwise they are fine to carry on as they are.
So I'd appreciate if you didn't call them selfish - that's definitely something my parents are not! I wouldn't be where I am today if not for them, just wanted to give something back and help out.

 

[biomed86]

Thanks for the above post very informative.
The main reason we were thinking about a new mortgage was to see if that would help bring the payments down, by consolidating the current mortgage and secured loan.

We both contribute to bills but unfortunately my parents are really quite stubborn and don't like accepting much in the way of say rent, until we started wondering if we could get a joint mortgage.

I take your point about The future for me and my brother wanting to take out mortgages later - definitely something to think about.

In terms of downsizing, also something to think about. I think their problem is the secured loan- this has bitten them, if we could just get rid of that or reduce the payments on it they'd be fine. Thankfully they are struggling to make the payments it's more that it doesn't leave too much left each month for their enjoyment!

Thanks for all the advice received!

This is supposed to say they aren't struggling to make the repayments. Typo!

 

[tony84]

I didnt say they ARE selfish, but ill take back my comments.

Doing what your saying wont help you get on the property ladder...it will, but not in a beneficial way.

 

[Suzuki]

The initial thought/idea was something my brother and I came up with so I wouldn't say my parents are being selfish at all. They keep refusing to accept rent, but we feel bad as we can see they could do with the help, hence trying to think of ways to contribute and at the same time we thought it would help us get on the property ladder.
They make all their payments fine and on time, but I guess they are getting older and my brother and I can't help but feel like they need a break, treat themselves a little etc. they complain very little, and just carry on as they always have. I suppose you could say we were away from home, have come back to live with them for the past year and just really want to be kind and help out.
When we put the idea to them they thought it sounded ok but wanted us all to get all the correct info and advice. So we've set up meetings with a solicitor and mortgage advisor so we can have all the facts. They'd only go ahead if we're happy otherwise they are fine to carry on as they are.
So I'd appreciate if you didn't call them selfish - that's definitely something my parents are not! I wouldn't be where I am today if not for them, just wanted to give something back and help out.

What are you going to do in 5 years from now when you've got a fiancé and want to start a family? (same for brother). You're going to be stretched on your mortgage payments already - in fact you might be in negative equity.

You're not going to be able to buy your own place to live. Its not going to be such a good idea when you're stuck in your mums basement till you're older than 50...

I would have thought a far better option would have been you moving out altogether and your parents downsizing to something thats in their affordable budget range.

 

[biomed86]

Well then it's a good thing they don't have a basement if I wanted to move out they'd not keep me locked in, was their idea for me to move home anyway so I can save up for a future deposit on a house. The idea was just to see if we could bring the overall monthly payment down a little by consolidating as the secured loan interest rates are pretty high and unattractive. I understand now that having a mortgage with them would be a drawback later.

Thanks for all the advice - lots of food for thought. I think we'll just have to leave them to it!

Thanks again everyone.