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    • Phil1111
    • By Phil1111 5th Dec 17, 1:18 PM
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    Phil1111
    Brother wants to take out joint mortgage against my will
    • #1
    • 5th Dec 17, 1:18 PM
    Brother wants to take out joint mortgage against my will 5th Dec 17 at 1:18 PM
    Hi all,

    My brother wishes to take a buy to let mortgage out on a house that we have both inherited. The property at the Moment is mortgage free and held in equal shares.

    He wishes to take out 50k and I would have to be a co signer for a mortgage I would not use or want. I would simply be signing the paperwork. As you can imagine this has caused much trouble.

    Question is, is that he has claimed all along that itís risk free for me and his financial advisor has told him it would not affect my borrowing . I cannot see this as being correct ? Am I right?

    Thank you.

    Thanks
Page 1
    • davidmcn
    • By davidmcn 5th Dec 17, 1:35 PM
    • 6,265 Posts
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    davidmcn
    • #2
    • 5th Dec 17, 1:35 PM
    • #2
    • 5th Dec 17, 1:35 PM
    Of course you're right. How could signing up to a 50k loan be "risk free", or not affect your borrowing potential? Why would you want to sign up to a loan if you're not getting any benefit out of it?
    • PasturesNew
    • By PasturesNew 5th Dec 17, 1:42 PM
    • 60,974 Posts
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    PasturesNew
    • #3
    • 5th Dec 17, 1:42 PM
    • #3
    • 5th Dec 17, 1:42 PM
    What is your current situation?

    No loan is ever risk free. Going into anything financial with family/friends is often fraught with issues in the future if things go wrong or if one "wants out".

    Why can't he do it on his own? Why can't he just buy your half from you and go it alone?
    • enjoyyourshoes
    • By enjoyyourshoes 5th Dec 17, 1:44 PM
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    enjoyyourshoes
    • #4
    • 5th Dec 17, 1:44 PM
    • #4
    • 5th Dec 17, 1:44 PM
    Why not sell the asset and split the proceeds ?

    He can do whatever he wants and you can do also?

    If you have opposite attitude to risk it may mean staying 'Brothers who talk' for a bit longer.
    Debt is a symptom, solve the problem.
    • TBagpuss
    • By TBagpuss 5th Dec 17, 1:44 PM
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    TBagpuss
    • #5
    • 5th Dec 17, 1:44 PM
    • #5
    • 5th Dec 17, 1:44 PM
    It seems unlikely.

    You'd have to declare it on any future mortgage applications. It might not make much difference, assuming that the rental income was enough to cover the mortgage, but it would have to be declared.

    It would probably be fairly low risk, particualrly if £50K is significantly less than his interest in the house worth, and you could build in security by having a formal agreement with your brother that he is solely responsible for the repayments and will indemnify you (i.e. explicitly agreeing that if he fails to make mortgage payments, you can claw back anything you end up paying to the lender, from him) and that the mortgage is to be cleared from his share of the sale proceeds if the house is sold, but it has some risks.

    If your brother is not able to met the mortgage payments then you would be liable to the lender. If the reason he couldn't pay was because you had void periods, could you afford the mortgage payments without the rent? Could he? In a worst-case scenario you might end up having to sell the property (or it being repossessed) in order to clear the mortgage.

    Does your brother own another property? Is there a reason why he wants to borrow against this one and not his own home?

    An obvious option if you can't agree would be to sell the property and then you can each spend, or invest, your share of the proceeds as you want (and if he wanted to buy your share of the property and take out a BTL mortgage to do so, then he could do that, or if you wanted to keep the property, you could look into buying him out.
    • molerat
    • By molerat 5th Dec 17, 1:53 PM
    • 17,478 Posts
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    molerat
    • #6
    • 5th Dec 17, 1:53 PM
    • #6
    • 5th Dec 17, 1:53 PM
    What is going to happen to the £50K ? A joint mortgage means you are jointly responsible for paying it, if he defaults you will be chased for the payments and it could lead to the house being repossessed and you losing out.
    www.helpforheroes.org.uk/donations.html
    • Phil1111
    • By Phil1111 5th Dec 17, 1:57 PM
    • 8 Posts
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    Phil1111
    • #7
    • 5th Dec 17, 1:57 PM
    • #7
    • 5th Dec 17, 1:57 PM
    Just because Iím his brother I suppose. Heís upto his eyes in debt and has a poor credit rating. He wanted to take this mortgage out interest only over 25 years.

    Just wanted to check with the experts on here that Iím right , and whatever his financial advisor was saying was incorrect. He also wanted to sign a letter of indemnity but I told him it was only as good as the person signing it.

    My feelings are that if anything happened the banks would chase me. The property would be under threat too and it would affect my future borrowing. I know rules are different with buy to lets but Iím guessing all above is still accurate.

    Thanks
    • Robin9
    • By Robin9 5th Dec 17, 1:59 PM
    • 1,956 Posts
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    Robin9
    • #8
    • 5th Dec 17, 1:59 PM
    • #8
    • 5th Dec 17, 1:59 PM
    If he can't buy you out could you buy him out ?
    Never pay on an estimated bill
    • Phil1111
    • By Phil1111 5th Dec 17, 2:02 PM
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    Phil1111
    • #9
    • 5th Dec 17, 2:02 PM
    • #9
    • 5th Dec 17, 2:02 PM
    The house which was my mumís has been rented out for the last 3 years to a great Tennant.
    So if we decided to sell she would be homeless and the property would be empty until itís sold. However long that is.


    Heís bought a house worth 460k then decided to do renovations. Obviously without the money to do so. I think the house is currently un livable in due to him deciding to knock walls out etc.

    I have a well paid job however itís very insecure and in a specialist area.

    We havenít spoken for ages regarding all this. As you can imagine itís very upsetting.
    • borkid
    • By borkid 5th Dec 17, 2:08 PM
    • 1,594 Posts
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    borkid
    I'm not sure if this would work but IF you had the £50K to lend would you give it to him in exchange for a greater share of the house?

    Personally I wouldn't help out at all. He has debts and has taken on a house without being able to afford to renovate it and is now expecting you to help him out. He sounds irresponsible regarding money.
    • TrickyDicky101
    • By TrickyDicky101 5th Dec 17, 2:12 PM
    • 2,827 Posts
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    TrickyDicky101
    You may be able to sell the property with a sitting tenant (and could maybe accept slightly less from the buyer if you are that concerned for the tenant)?
    • Phil1111
    • By Phil1111 5th Dec 17, 2:25 PM
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    Phil1111
    He’s completley irresponsible. He told his solicitor that he’d forwarded me all his financial info. Nothing of the sort. All I had was one email stating the monthly interest only payments. I was obviously worried about the interest free bit too.

    My father has also backed him, and can’t understand why I am unwilling to help him. I have no other family either.

    This house is also in the north of England where property is relatively cheap. So in my opinion it’s so completely unnecessary along with all the nastiness etc.
    • getmore4less
    • By getmore4less 5th Dec 17, 2:38 PM
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    getmore4less
    it does not sound like this would be sensible.

    The problem if you buy him out he will just come asking for more.

    Is he also expecting the rent to pay the interest?

    What's the place worth and gross yield?

    you could go on the mortgage on the basis that an extra £25k's worth of the house is yours+your 1/2 and take the reduces income and hope for some capital growth.

    still not ideal,

    if your dad is so keen why not mortgage his house and see if the son pays.
    • Phil1111
    • By Phil1111 5th Dec 17, 2:48 PM
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    Phil1111
    Interest only deal of about £100 a month over 25 years! I did tell him what about the capital. Will need to be paid at some point.

    The rent gained is £600 per month. House value approx £180k to £200k. Although houses are not selling near there. The Tennant has also spent her own money doing the house up.
    • Robin9
    • By Robin9 5th Dec 17, 2:56 PM
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    Robin9
    I'm a little confused. What has the house worth 460k got to do with the house you've inherited ?
    Never pay on an estimated bill
    • ACG
    • By ACG 5th Dec 17, 2:59 PM
    • 15,896 Posts
    • 8,142 Thanks
    ACG
    With the Mortgage being a BTL, assuming the property is let out and the rent is more than the Mortgage, it should not affect your borrowing capacity for your own Mortgage.

    However, if he misses a payment, pays late or refuses to pay at all you would both be 100% liable for the Mortgage. So you could find you are making the repayments. Personally, if you are arguing about it at this stage, I would sell up and keep it separate. Business and family rarely mix well, a BTL is a business. With the equity, you can both do as you wish with your own share and then there are no family fall outs. You both want very different things by the looks of it.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Phil1111
    • By Phil1111 5th Dec 17, 3:01 PM
    • 8 Posts
    • 0 Thanks
    Phil1111
    He’s over stretched himself and bought a house for £460 k for him and his girlfriend and his children. The house we jointly own is worth approx 180k and the House he wanted to take a joint mortgage out on.
    • Mojisola
    • By Mojisola 5th Dec 17, 3:02 PM
    • 28,637 Posts
    • 72,962 Thanks
    Mojisola
    My brother wishes to take a buy to let mortgage out on a house that we have both inherited. The property at the Moment is mortgage free and held in equal shares.
    Originally posted by Phil1111
    The rent gained is £600 per month. House value approx £180k to £200k. Although houses are not selling near there. The Tennant has also spent her own money doing the house up.
    Originally posted by Phil1111
    Could you buy him out?

    Would the tenant be interested in buying the house?
    • getmore4less
    • By getmore4less 5th Dec 17, 3:24 PM
    • 30,783 Posts
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    getmore4less
    Interest only deal of about £100 a month over 25 years! I did tell him what about the capital. Will need to be paid at some point.

    £50k £100pm that's 2.4%

    The rent gained is £600 per month. House value approx £180k to £200k. Although houses are not selling near there. The Tenant has also spent her own money doing the house up.
    Originally posted by Phil1111
    £600pm on £190k that's gross yield 3.8% but the tax will eat into that.


    Not that great but more than the potential interest..

    I think buying him out for £90k will be lower risk than sharing a mortgage for £50k
    • Keep pedalling
    • By Keep pedalling 5th Dec 17, 4:20 PM
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    Keep pedalling
    I would outright refuse, and if he won’t / cant buy you out, tell him he either agrees to sell the property or you will force force a sale. Better to be out of this joint ownership, than carry on as you are.
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