A weird scenario

andystephens

Hello all,

Just wondered how this would work. Me and the wife have been living with her parents for the last 6 years and now need to find our own place. Ideally we would like to buy, but prices around here are a lot. Now we have seen a place which would be perfect, but its on at 220k and we could only get a mortgage at 110k. A friend of mine (who is not short of money!!) wants to buy it, but does not want to pay the full asking price.

What would be the deal if I said to him we go halves on the property, he puts up 50% and we pay the rest with a mortgage, how would it work?

Thanks and sorry its a bit complicated!

maninthestreet

So what names will appear on the property deeds as owners? What will the prospective lender say when they discover they will only have a legal charge on 50% of the property?

andystephens

I did not know if it could be done, and if so how the best way of going about it

Money_maker

What rent would he charge?

G_M

As the Man above says, a mortgage lender will only lend if the names on the mortgage match the names on the deeds.

And who's going to live there? Or does the friend see this just as an investment - in which case will he want rent from you for the half he owns?

Lots of unanswered questions here.....

Only way I see this working is if the friend gives you a long-term or open-ended loan of the 50%, repayable (say) when you sell. The house is then in your names as is the mortgage, the lender just sees you putting down a 50% deposit, and you have a separate agreement with friend.

But what does he get out of it? Capital growth as property prices rise? That works for him, but not for you! If you decide to move in 10 years (extra rooms for the 5 kids), you'll owe him 50% of the then current value, and you'll never be able to afford the next house (unless you do the same again...)

poppysarah

Insane.
If you can only afford 110k then don't buy a more expensive house.

andystephens

i think i will give it a miss then, seems to complicated!!!

ritz55

I would suggest seeing a independent mortgage broker, you maybe able to borrow more money that way from a mortgage lender.

Lil_Me_2

My partners parents own 3/5s of the house I live in (cash), my partner owns 2/5s (mortgage). The house is in my partners name only with a separate contract drawn up between my partner and his parents that they are entitled to 3/5s of the property whatever the value.

It's not complicated, but you all need to be on the same page about everything. For example, I pay rent to his parents and his parents are responsible for 3/5s of the upkeep of the house (if something needs fixing for example)

So you need to work out what your friend would want to get out of it. It was fairly simple with my in laws that they wanted to help us get on the property ladder and have been very generous in doing so. When I buy into the house (next week!) we've agreed that they will keep a 1/5 stake in the house as a long term investment but it'll be rent free.

G_M

Lil_Me wrote: »

My partners parents own 3/5s of the house I live in (cash), my partner owns 2/5s (mortgage). The house is in my partners name only with a separate contract drawn up between my partner and his parents that they are entitled to 3/5s of the property whatever the value.

It's not complicated, but you all need to be on the same page about everything. For example, I pay rent to his parents and his parents are responsible for 3/5s of the upkeep of the house (if something needs fixing for example)

So you need to work out what your friend would want to get out of it. It was fairly simple with my in laws that they wanted to help us get on the property ladder and have been very generous in doing so. When I buy into the house (next week!) we've agreed that they will keep a 1/5 stake in the house as a long term investment but it'll be rent free.

This is pretty much the arrangement I outlined in my post. The difference being with Lilme it's family. So the key motive is helping the partner onto the property ladder.

If your friend's motive is the same, fine - but if it's financial, then as I said, he'll want his 50% when you sell which really backs you into a corner in later life. I've seen it happen!

Fire_Fox

andystephens wrote: »

Hello all,

Just wondered how this would work. Me and the wife have been living with her parents for the last 6 years and now need to find our own place. Ideally we would like to buy, but prices around here are a lot. Now we have seen a place which would be perfect, but its on at 220k and we could only get a mortgage at 110k. A friend of mine (who is not short of money!!) wants to buy it, but does not want to pay the full asking price.

What would be the deal if I said to him we go halves on the property, he puts up 50% and we pay the rest with a mortgage, how would it work?

Thanks and sorry its a bit complicated!

If you can only afford to buy half the house, how can you afford to rent the other half, deal with ongoing maintenance AND pay the bills on the whole thing? If it is large, your council tax and heating costs will be astronomical in comparison with your income.