Is this even possible??

simonc101

Hi, like many I am looking/dreaming of buying my first house. My wife and I do not have any savings to put down a deposit so we have never really looked into mortgages to seriously.

Just recently a well off friend offered to buy a house with us. An investment for him as he would not want to live in it. He would be prepared to buy up to 50% of the house paying cash leaving us with the other 50%+ to buy between my wife and I (still no money for a deposit). We would then pay him a rent on his share in a way similar to how I understand a housing association would work.

My question is could we do this? Is this the best way of setting things up? or is there a better way of doing this?

Your advice/ ideas would be very greatly appreciated.

kingstreet

Who is going to get the mortgage?

He can't be part-owner if he isn't party to the mortgage, so he puts up the deposit, then has to take responsibility for them mortgage too or not be named on the deeds?

He could put up his 50% and you get the mortgage, him taking a second charge over the house to protect his interest. Your chances of getting that past a mortgage lender would be interesting, to say the least...

castle96

If you fall out and he wants his money back....?
You need ot sell, how much of the rise/fall in price is allocated to him/you...?
Lender would/not allow if he was not living there ...?

Must be loads more potential problems. Easier ? for him to lend you the money ? (but then no guarantee you would repay as not 'secured')

Mrs_Z

Don't do it. If you can't afford to buy without your friend, just rent. Loads of potential problems in store.

I'm a firm believer in neving mixing friends and business.

simonc101

I am not worried about falling out with friend or him wanting his share back. It is not really an issue. We would also draw up a contract with a soliciter to make sure everything is official.

We are looking at paying him rent on his share an then paying the other share of the mortgage. If it comes to selling the house he would have 50% of the sale value.

Mrs_Z

simonc101 wrote: »

I am not worried about falling out with friend or him wanting his share back. It is not really an issue. We would also draw up a contract with a soliciter to make sure everything is official.

We are looking at paying him rent on his share an then paying the other share of the mortgage. If it comes to selling the house he would have 50% of the sale value.

It might not be an issue at present but how do you know it won't be in the future? What happens if he does want his money all at sudden? You'll be forced to sell the house, you might not get the price you pay for it, who's going to be responsible for any maintenance and sellers/buyers/survey fees? I think you would be much better off waiting and saving for the deposit and then do it properly.

DVardysShadow

Suppose you buy for 120. Your friend puts in 60 and you borrow 60. Then you need to sell, but it only fetches 100. If your friend accepts 50, you will only have 50 to pay back a mortgage of 60. So the bank will not let you sell until you find another 10 to pay them off. So then your friend reluctantly has to accept 40 and you owe him another 10.

That is why you need savings when you buy a house. Having your friend in on the deal only gets you a loan and puts you in a position which the bank would not have let you put yourself in if you were buying on your own.

Don't do it.