Joint Mortgage with Satisfied CCJ Advice

tel1969

Hi All,

I was made bankrupt in 2008 and discharged from bankruptcy on October 2009. I have completed final payment for my IPA this month (March 2012) and am now officially 'free'. All the debts are now satisfied. I am aware that a CCJ stays on my credit record for 6 years.

I am planning to buy a property with my brother and sister in law. I will be providing the deposit of approx 50k toward a property with the value of 180k. My idea was for my brother & sister in law to get a mortgage in thier name and in 2 years time when my credit record is clean, to take over the mortgage & have the deeds transferred into my name. On further investigation i realise that there is a implication of addtitional stamp duty if the property if it was transferrred to me & if the mortgage company does not agree to transfer the mortgage i would have to take out a new mortgage and find a deposit again. As you can imagine that all incurs expense.

The other option would be for the 3 of us to take out a joint mortgage, the deeds to be in all 3 of our names. This way i think i would not incur stamp duty and the mortage would be simple to take over as my name is already on the deeds and mortgage.

My question is...Would option 2 be feasible and will we be likely to be refused a normal mortgage due to my CCJ taking into account that the deposit will be big? I really dont want to be taking a sub prime mortgage with high fees & long tie in times.

Sorry for the long explanation, i thought it better to be clear on the facts. Advice really appreciated

Dave_Ham

Hi there,

There a bucket load of considerations with this sort of arrangement, I will try and give you some highlights..

Option 3 is a non runner, well certainly anytime within the next 2 years.

Option 2 has scope and would be the most cost effective, but you genuinely need some experienced advice. Think of in advance:

• I assume you are proposing they buy as a buy to let and let to you. Product fees are high currently and the rates are not as attractive as you see online.
• If you are trying to be a bit clever and get a 2nd residential mortgage in their names, this has many pitfalls not least of all their integrity and credit files
• If the idea is to not sell as you would attract stamp duty, which I get you will need to work really hard to build up your credit rating to be able to be "mortgageable" in 2 years time, assuming they take a 2 year fix
• If you put in the deposit and are happy with a informal agreement that is ok, but if you wanted to protect this formally it could present an issue for the mortgage company

I have seen plans like this work and work well for all involved, but you have done the right thing trying to go in with eyes open but you need experienced advice going forward with full facts.

Additionally, think you may come into some criticism for just finishing your bankruptcy and already havea £50k deposit, still sure there is a plausible reason

tel1969

Hi Dave,

Thanks for the reply. Re the deposit - I had 2 savings policies going when i was made bankrupt. I paid 16k to the Insolvency office to buy those policies & keep them going, so to provide a deposit for myself once i had completed my IPA. The remainder of the deposit will come from the Bank of Mum & Dad.

Im just worried that if they got the property and mortgage in thier name and sold it to me at 'cost' 2 yrs later whether it would raise eyebrows as they would not of profited from it.

I want to get onto the property ladder now while i can before being totally priced out of the market. Would it just be better to get my brother & sis in law to get the mortgage in thier name, i stump up the deposit and just buy it off them in 2 years when hopefully i can get a mortgage?

Dave_Ham

It all depends on their situations, which I do not know fully.

You would not need to sell, if you remortgaged yourself on (ie added and removed one of them) then the other further down the line.

They could sell at cost, but depending upon timescales it may not get valued at that. If we are talking £10-£20k unlikely, but if you were talking in 15 years and the property was then £800k you will not be allowed to buy for £200k legally..

As I say, you have enough to go at, but need some decent advice with all the facts presented in order to optimise your situation and ensure everyone understands the way forward.

It is achievable with thought, other things being equal..