Complicated mortgage situation, help!

freeme86

Hi I am finding it difficult to get mortgage quotes over the phone as my situation is a bit complicated ..so I was wondering if anyone had been in a similar situation to me and can offer advice, before I try and fit i some apointments at the bank.

Basically I have inherited a property, in joint ownership with my two brothers, and we now have it on the market for sale. However me and my partner are planning to buy it to live in, so we are trying to work out how to do this. My first thoughts are if a stranger was to buy it (say for £150k), then me and my 2 brothers would each get £50k from the bank. So if me and my partner buy it, this would be the same situation, I would still get 50k like my brothers???

So I was thinking perhaps we could get a mortgage of £130k, putting down a 20k deposit (10k from my partner, and 10k from me) and I get the 50k cash. We would then be joint owners 50/50.

OR alternatively I could use my whole share of the property (50k) as the deposit, so we would only need a mortgage for £100k...and perhaps only £90k if my partner puts his 10k deposit in still.

OR I could use a partial amount of my share as the deposit (say 30K), so I get £20k as cash, and the 10k from my partner...

See its quite complicated! I just wondered if this made sense to anyone...and if anyone can see an obvious solution. I find it very hard to discuss this with the banks!
Also our current situation is that my partner is a first time buyer, whilst I am currently putting a property on the market (that I own with a housing association!!).

Thanks in advance!!!

beecher2

Firstly you need to get a proper valuation done of the house to work out how much it is really worth, and how much you'd have to give your brothers if you bought it. And take the house off the market if you're wanting to buy it.

Go and see a mortgage adviser for help on what sort of mortgage you'd be able to get.

Thrugelmir

You need to apply for a mortgage to buy the 2/3 of the property you don't own, ie the £100k.

The equity you currently have in the property will remain there.

To apply for the mortgage you may need to sell your own property first.

Conrad

You can buy it without a physical deposit if you wish. This sort of case will not readily fit any lenders standard application process so you will struggle doing this online or over the phone with a call centre - they will have been trained using dummy application scenarios that are straight forward.

You might find a MORTGAGE broker (not a financial adviser) with some years of experience will know how to place this and will contact a lenders regional manager first in order to get a Human at the lender to oversee such a case.

As an example of one of dozens of questions which may throw you / an inexperienced adviser = 'What is your current residential status, is it 1) living with family 2) renting or 3) owner?'

All the best

Conrad

PS - some lenders will take your word that your current home is to be let out for now and not require your existing lenders written permission and wont query the rent payment in relation to your current mortgage and rent payment. I say this in case your current home takes a while to sell but you want to proceed on the new property now.

freeme86

Thanks for all your replies! It is good to get some advice as I haven't a clue about this sort of thing.
We have already had 3 valuations of the property before we put it on the market (talking about the inherited property), so we have discussed what sort of price to buy it for from my brothers (basically a few grand below the current asking price as we can save on estate agent fees etc), so it was just where to go from there really.

We thought get a mortgage for 2 thirds, so my third remains as the deposit....but the issue there is technically my partner would only really be paying for a third of the property (that's assuming we go 50/50 on the mortgage).Would that be normal, or would we come to some sort of arrangement where my partner pays more mortgage than me, say 2 thirds, so we end up owning the equivalent amount??

Thanks again everyone, really appreciated. Hope all this makes sense!

beecher2

freeme86 wrote: »

We thought get a mortgage for 2 thirds, so my third remains as the deposit....but the issue there is technically my partner would only really be paying for a third of the property (that's assuming we go 50/50 on the mortgage).Would that be normal, or would we come to some sort of arrangement where my partner pays more mortgage than me, say 2 thirds, so we end up owning the equivalent amount??

It is up to you how you work out who pays what - I'd have thought in a partnership you'd pay equally. You might want to get something drawn up in case you split up which means you're entitled to more of the proceeds of any sale though.

Have you found a solicitor yet? They'd talk you through a lot of this.

getmore4less

You need to thrash out the ownership and have exit plans for possible future senarios like should you split.

For a basic 50:50 on £150k purchase you have £50k, £100k mortgage.

You want to own £75k each so you borrow £25k they borrow £75k

So that is you pay 25% of the mortgage they pay 75%

when(if) you come to split you agree a value then get 1/2 each, you pay of 25% of the outstanding mortgage they pay 75%.

Think about how you would/could buy them out especialy if prices rise.


BTW 50:50 can be easier for thing like inprovments you just share them 50:50 as well