23 yr old....wants to buy own place.

ipri

Hi...my son and his girlfriend are looking to buy a small place together...I have forgotten the details of our purchace...we had an endowment/pep arrangement....where can I refresh myself re the various mort options / fees etc.

He has been lucky to have been left about £55,000 by a relative....gets about £18k / yr...no debts....no car or transport concerns...no card debts ( i think)...she works..dont know her financial state....waits on in pub.....they are looking at around £100,000 price.....any info so i can help them....thanks

Lokolo

Should be OK to get a mortage. See a broker who can advise, but I wouldn't be buying with a GF unless it was very very serious. Problems down the line otherwise.

ipri

sorry!...didnt mention.....he's talking about getting the mort. in his name....possibly adding her name later when sure of long term status....I have talked about poss. problems if they breakup..

BitterAndTwisted

He needs to consider seeing a solicitor to draw up a deed of trust. This will protect that £55k he'll be using as a deposit. No-one want to get into a long-term joint financial commitment only to risk losing such a substantial sum in a relationship split some time down the line. At 23 years old the risk of that happening is very great indeed, no matter how loved-up they are right now. In my opinion he would be much better off thinking about buying somewhere on his own without the girlfriend.

zzzLazyDaisy

ipri wrote: »

I have discussed the girlfriend issue....what are the possible legal problems?....and what can he do?

Best advice is for him to buy the place in his sole name. Let her live there if that is what they want, and let her contribute to/agree to pay for utilities, food, insurance, council tax, TV licence, sky, whatever, but keep the mortgage repayments clearly in his name and as his responsibility.

What are the possible legal issues if they buy in simple joint names (legally known as joint tenants)? She owns half the house, no ifs, no buts. If they split up a couple of years later, she walks away with half the net equity, which includes the original deposit.

What can he do - well if he is determined to buy a house in joint names with her, or if he needs her name on the mortgage to get the required amount of funding, then he needs to protect his deposit. This can be done by buying the house jointly as tenants in common in unequal shares, and/or a trust deed. But this is not always as straighforward as it might first appear (do a search on MSE for tenants in common).

In either case he will need legal advice if he decides to buy the house in joint names.

zzzLazyDaisy

ipri wrote: »

sorry!...didnt mention.....he's talking about getting the mort. in his name....possibly adding her name later when sure of long term status....I have talked about poss. problems if they breakup..

Okay, that is much easier then. If the mortgage is to be in his sole name, the house must also be bought in his sole name.

So as long as the mortgage repayments are kept separate and clearly his responsibility, and as long as she doesn't pay for anything that will add value to the house (such as an extension or double glazing) which might gain her a beneficial interest in the property, then the house remains his and she is not entitled to a share of the equity if they later split up.

Please note: this applies to England and Wales, the law may be different in Scotland.

elantan

my son ( who is 20 years old) took out a mortgage on his house for the same money your son is planning on borrowing for his( he had a £20k deposit saved up by himeslf), their wage seems to be roughly the same ( my son has slightly more income) it shouldnt be a problem,

he also has a friend living with him, the friend is a lodger i think they do the rent the room scheme ( but he doesnt pay the full amount available on the rent a room scheme) and half the bills, this covers half the mortgage and half the bills, this seems to work for them

could he take her on as a lodger until things in their relationship are at a stage where both feel they want to be more permanant (sp)

ipri

Thanks...what buying options are available these days?.....he would only be using a part of his £55K as a deposit.

Lokolo

Well the bigger the deposit, the cheaper the rate.

I would be using £40k, so he has a 60% LTV. This gives him £15k to pay SD and other fees and then enough to do up the house, and should leave him some money left over.

That means he will need a loan of £60k. This is 3.3x his income, which should be doable.

He should look at some places he likes the look of, then when it's getting closer to thinking about putting an offer in, talk to a broker who can give some Key Facts documents on possible mortgage options.

jimpix12

Interesting that nobody has mentioned the pitfalls of buying now, especially to a 23 year old. How secure is his job? What if he wants to travel or take time out abroad? Go to University/education? Change of career direction? What if she leaves him, can he survive on his own and afford the mortgage by himself?

Sorry to put a downer on it, but this is a 25 year commitment, and when you're 23 (I am not much older) I think you should at least rent first for a few years. Your post didn't mention if they were already renting or living at home, it's interesting the way a relationship can change for example, once you live together in your own place. If they haven't rented then he'll need to factor in additional costs.

And of course then there's the economy and the general anticipated trend in house prices over the next 5 years. I believe there should be a responsibility even when your kids are over 18, to help them understand that it's not all fun and games when buying a home, especially with the heightened risk of negative equity etc.

I recently bought a house, my parents told me that renting was 'dead money' and never once took me aside and spoke about affordability etc, which I don't blame them for of course, it was all BUY BUY BUY, luckily I did my own research and disregarded that advice mostly. However I do think every parent should overstate the risks when buying a home for their child's sake.

BitterAndTwisted

elantan wrote: »

could he take her on as a lodger until things in their relationship are at a stage where both feel they want to be more permanant (sp)

NOPE! Landlords do not share a bed or plan a future with their lodgers. I wouldn't like to try and persuade a court that the person I lived with as a partner was purely a lodger. That really wouldn't fly if or when they split up: that hefty deposit would have to be shared.

The most sensible option would be a full and frank discussion between them about every single possible outcome and what they both agree should happen. Then have it drawn up as a deed of trust if they are to buy a property in both of their names.

If he goes ahead and buys the property in his name only then he must not accept a penny from her which could later be interpreted as rent or a contribution towards the mortgage-payments. No expensive holidays in lieu of rent, no repairs and maintenance, no furniture, no improvements. Only proveably half of the utilities, council tax and groceries. Nothing else.