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A possible scenario..... complicated???
fimonkey
Posts: 1,238 Forumite
I'll try and describe this as easily as possible, it's an option that's been presented to me recently.
Currently I live with my friend and her brother, they own the house together (joint mortgage) and I rent a room from them.
The brother now wants to move out and I'm in a position to buy his share from him, and my boyfriend would then move in as a tenant (essentially I take the brothers place financially and my boyfriend takes my place financially, my friend stays the same).
However, my friend and her brother have 2 mortgages, both with the same lender. This is because the first place they bought was a joint mortgage with a lower interest rate and there was a penalty fee to get out of the mortgage, so they were advised to just transfer that mortgage onto the new house (where we live now) and take out another mortgage to cover the extra. (Does that really make sense)?
SO... If we take that route, how would we do it???
1. I know we'd have to have the house valued and as it's a 50/50 share I'd pay the brother his share of the house right? But I would have to raise a mortgage for that (though have a reasonable deposit). Would they have to give up their two existing mortgages and then friend an I get a joint mortgage?
If this is the case, they would have to pay early redemption fee's on both their mortgages, and then we (friend and I) would have to pay an arrangement fee for new mortgage etc. Seems an awful lot of fee's to me, is this the only way to do it?
Any other implications I've not thought of? (I get on v.v. well with friend, we're both in stable long term jobs and my bf almost lives there anyway. We'd make hima tenant purely to protect his interests).
Cheers all.
Currently I live with my friend and her brother, they own the house together (joint mortgage) and I rent a room from them.
The brother now wants to move out and I'm in a position to buy his share from him, and my boyfriend would then move in as a tenant (essentially I take the brothers place financially and my boyfriend takes my place financially, my friend stays the same).
However, my friend and her brother have 2 mortgages, both with the same lender. This is because the first place they bought was a joint mortgage with a lower interest rate and there was a penalty fee to get out of the mortgage, so they were advised to just transfer that mortgage onto the new house (where we live now) and take out another mortgage to cover the extra. (Does that really make sense)?
SO... If we take that route, how would we do it???
1. I know we'd have to have the house valued and as it's a 50/50 share I'd pay the brother his share of the house right? But I would have to raise a mortgage for that (though have a reasonable deposit). Would they have to give up their two existing mortgages and then friend an I get a joint mortgage?
If this is the case, they would have to pay early redemption fee's on both their mortgages, and then we (friend and I) would have to pay an arrangement fee for new mortgage etc. Seems an awful lot of fee's to me, is this the only way to do it?
Any other implications I've not thought of? (I get on v.v. well with friend, we're both in stable long term jobs and my bf almost lives there anyway. We'd make hima tenant purely to protect his interests).
Cheers all.
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Comments
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you may find that they have one mortgage (ie one charge on the property) but with 2 sums of money borrowed running under different deals.
somehow it would need manouvering so that the mortgage and house is in joint names with you replacing her brother. whether this is possible under the same mortgage arrangement I don't know. Your friend needs to ask the mortgage company if she can replace her brother with you or if they will cancel the redemption penalties if you and her take out a new mortgage with the same lender.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
Yes, it's not unheard of.fimonkey wrote:However, my friend and her brother have 2 mortgages, both with the same lender. This is because the first place they bought was a joint mortgage with a lower interest rate and there was a penalty fee to get out of the mortgage, so they were advised to just transfer that mortgage onto the new house (where we live now) and take out another mortgage to cover the extra. (Does that really make sense)?
Yes to all you questions. Unlike the US (or some states in the US) you can't "take over" someone else's mortgage. At least that's not how it's done in the UK and almost all domestic lenders will require you to take out your own mortgage.fimonkey wrote:1. I know we'd have to have the house valued and as it's a 50/50 share I'd pay the brother his share of the house right? But I would have to raise a mortgage for that (though have a reasonable deposit). Would they have to give up their two existing mortgages and then friend an I get a joint mortgage?
Again yes, I suspect so. It may be worth checking what their penalty clause now is as it may be a reducing one. It may also be worth approaching the existing lender, explaining what you want to do and whether you can take out a mortgage with them. This should make things easier as they already have the charge on the property plus 2 mortgages which they may be able to keep. Obviously it depends how competitive the existing lender is, you may well find a better deal with someone else.fimonkey wrote:If this is the case, they would have to pay early redemption fee's on both their mortgages, and then we (friend and I) would have to pay an arrangement fee for new mortgage etc. Seems an awful lot of fee's to me, is this the only way to do it?A house isn't a home without a cat.
Those are my principles. If you don't like them, I have others.
I have writer's block - I can't begin to tell you about it.
You told me again you preferred handsome men but for me you would make an exception.
It's a recession when your neighbour loses his job; it's a depression when you lose yours.0 -
Id say what happens if/ when you want to sell your share? Or what happens if financially one or either of you cannot pay. For example ill health, what would the other person do. All nightmare scenarios must be explored before making any decisions.:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
Of course. Both of us see this area as our permanant home, my friend definately wants to stay in the house for at least another 5 years (but will have to move if her brother decides to push for a place of his own now). In terms of illness etc, well then we'd make sure we had appropriate insurance to cover it (in the same way her brother and her have).0
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what I mean is not only do you discuss it, you have it ratified in a legal document.
I had insurance for ill health, what a surprise it never paid out.:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0
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