Adding a friend to our deed

Bigsul

We have a large mortgage and quite a lot of land and are struggling to meet monthly financial commitments. We have entered a Debt Management Plan and are looking for ways to reduce our mortgage outgoings. We live with our elderly parents who are ill and cannot move so that is out of the question.

A very close friend has offered to buy into our house and land offering to buy 1/3 if she can stay in one of our outbuildings. We had already considered this an option and feel it would be a positive move as we would be able to be debt free with a reduced mortgage, yet still maintain a reasonable amount of equity in the property.

We have considered all of the personal impacts on our life so am not asking for any advice on whether we are making the right decision. However we do need advise on the following:

1. I appreciate that the mortgage company would probably need to agree and therefore carry out a credit search on our friend, but would this also mean they relook at our finances and credit score us again? Obviously we do not want this to happen at this point.
2. Is there a way our friend could be included on our deed without being associated with our current debt problems in the future?
3. Does anyone have any idea on solicitor costs for this kind of thing?

Many thanks.

sammyjammy

You would need to apply for a new mortgage joint with your friend, also having a joint mortgage would mean you are all financially linked.

Beware - taking actions like this is a sure way to lose a friend!

Bigsul

Are you sure? The friend would be putting in a lump sum, surely this would not require a new loan.

sammyjammy

Bigsul wrote: »

Are you sure? The friend would be putting in a lump sum, surely this would not require a new loan.

Yes.

You cannot add her to the deeds and not add her to the mortgage.

CLAPTON

In general, mortgage companies require all the owners (i.e. people with their names on the deeds) to be jointly liable for the mortgage; so they will almost certainly require you to remortgage.

This will form a financial relationship betweeen you and your friend which, as you are on a DMP, will probably damage your friend's credit rating.

McKneff

Why could she not just stay there and pay rent, surely that would help you out.

simpywimpy

could you just sell off one of the outbuildings as a separate item altogether?

Bigsul

simpywimpy wrote: »

could you just sell off one of the outbuildings as a separate item altogether?

That would require planning permission, which would not be granted.

In reply to McKeef, renting is a possibility but joint ownership is preferred as it means all are debt free with a stake in bricks and mortar, that has substantial equity.

Ditch_Crawler

You and your friend appear to have good confidence in each other. I wonder if it's technically possible for your friend to give you a second mortgage on the property, thereby acquiring a kind of a stake in it. You would have to come to a separate agreement about how your friend would share any increase (or decrease) in the property's value over time.

Ditch

planning_officer

As stated above, for your friend to live in one of your outbuildings would require planning permission, as you're creating a new dwelling. If you apply for planning permission, whether it would be acceptable or not depends on the policies of your Local Planning Authority.

Voyager2002

simpywimpy wrote: »

could you just sell off one of the outbuildings as a separate item altogether?

I cannot imagine how planning permission would be required to sell off part of your property.

Planning permission may well be required to change the use of the outbuilding to a dwelling, but this would still be the case if the friend were to buy a share of your equity.

In short, you need to discuss this plan with a solicitor.