Mortgage problem

ronmiel

My husband has recently died and I would like to sell my present property and move to a bungalow. My home is probably worth about £170,000.00.
I have two sons and my younger son and his wife, would like to move in with me and purchase 1/3rd of the property. The bungalow we have seen is £150,000.00, so I would put in £100,000.00 and they would need a mortgage for £50,000.00. The idea is when I die, my 2/3rd share would be divided equally between my two sons, and my younger son would hope to buy his brother out.
My son has been offered a mortgage but has been advised because of my age (75yrs) he can't get a shared mortgage with me being the principal owner. The house would have to be in his name and my £100,000.00 would count as a deposit. This would make it difficult for me to leave a share to my eldest son.
Is there any way he could get a mortgage, just for his share, leaving me the principal owner.

kingstreet

No. A mortgage is a joint and several liability, a liability accepted equally by all the owners despite what their share in the property might be.

A lender won't accept a mortgage on a share of a property because the security would be poor. Who could they sell the share to, if you defaulted and were repossessed?

Have you spoken to a whole market or independent broker about this? Often bank employees believe what their bank does is the only way and their experience of other lenders' products and criteria is non-existent.

Peelerfart

I agree with Kingy ^^ Definately a case for a pro methinks!

Good luck

PF

holly_hobby

In my days as a mge adviser - and even advising brokers - if the older individual's income is not reqd, but the youngers is - you just put the younger applicant as first name/main applicant on the app, with Mum as 2nd name. (as the older individuals income is not reqd as part of the affordability checks, their age shouldn't ordinarilly be a problem - although lenders criteria will mention max ages this is usually in relation to affordability - a chat with a mge broker will guide you to the best lender with the right deals for you)

You effect the mortgage on whats is called "tenants in common" - whereby you can write the % ownership with your younger son in differing % i.e 60/40 or whatever ( in relation to your 100k). You may and should also write your % share as a tenant in common within your will, which means that you can have your share apportioned as you wish.

Its already been mentioned by Kings. that as mortgagors (borrowers) you are BOTH responsible for the mge repayments - so if your younger son whom you shall be moving in with has some money issues etc, it will be down to you to keep those payments being made, to avoid you all being subject to repossession in the event of prolonged none payment (proceedings may start from 3 mths none payment onwards) - and in that event your 100k will/may be lost in the sale & redemption of the loan.

Further problems with this are - do you also want your share of any increase in the property value to also be added to your original 100k ? And most importantly, what if your younger son living in the property is financiallly unable to buy your "willed" share from his siblings ? If your other children WANT their inheritence, they may force the sale of the property - where will that will leave your younger son ? What if the property loses value - and there isn't the 100k equity in there to "pay off" your other children at the time its reqd ...

I am in no way saying anything negative about your children or how they will handle financial matters when the time comes, but these are very important issues to consider on top of the actual mechanics of the actual 100k & moving into together - and you know money can and does do funny things to people ...

Lots to consider, lots to discuss with all your children included as part of the whole decision making process.

Hope this helps

Holly