Holding two mortgages?

TJ901

Hi,

Sorry if there's already similar advice on here, I had a look but couldn't see anything too similar.

Basically my mother has recieved 25k recently as a result of an inheritance which she'd like to put towards a nice house to live in. At the moment she's a low earner so lives in a cramped one bed rented flat so is jumping with joy at the thought of being able to move somewhere bigger where she'll actually be able to make her own.

This is where my issue comes in! Basically, she's asked me and my brother to get a mortgage in our names and buy the house for her to live in, to which she'll contribute the deposit. My brother is also potentially looking to move back in with her into whichever house they buy, due to a relationship breakup.

Basically, my questions are whether it's likely me (20k earner) and my brother (15k earner) are likely to get a mortgage for a 100k house (it's the north, so cheaper!) with a 20-25k deposit and also how that will effect us in 10 years-or-so time when we'll each be hopefully looking to buy a place of our own.

Many thanks!

nomoneytoday

Borrow £75k, with £35k income and a 25k deposit?

I'd say it was a fair chance, depending on your outgoings etc

~Beanie~

Who is going to be paying the mortgage, you and your brother? When the time comes and you want to buy somewhere of your own, could you afford to pay 2 mortgages (assuming that you qualified for another one)?

What happens if you fall out with your mum or brother? Will your mum be paying rent or will she be living there for free?

Personally I don't think its a very good idea, there are far too many things that could go wrong!

TJ901

nomoneytoday wrote: »

Borrow £75k, with £35k income and a 25k deposit?

I'd say it was a fair chance, depending on your outgoings etc

Good to hear!

~Beanie~ wrote: »

Who is going to be paying the mortgage, you and your brother? When the time comes and you want to buy somewhere of your own, could you afford to pay 2 mortgages (assuming that you qualified for another one)?

What happens if you fall out with your mum or brother? Will your mum be paying rent or will she be living there for free?

Personally I don't think its a very good idea, there are far too many things that could go wrong!

I totally understand your concerns and I'm weighing up all of this stuff at the moment.

Basically my mother has said that she's happy to pay the mortgage repayments as rent so technically all me and my brother are doing (as long as she's in a job!) are giving up our credit for her with the knowledge that it's in our name anyway.

Rough calculations on moneysupermarket estimate a monthly repayment of around £350 a month, so it's not too pricey should anything go belly up.

I'd also hope that I won't fall out with mother or brother, but got to prepare for all eventualities!

Yorkie1

You may run into difficulties with your plan because the deposit is coming from someone who is not on the mortgage but will be living there (i.e. your mum). Lenders don't like this sort of arrangement.

Also, you will need a buy to let mortgage if you both are not going to be living there - and some lenders are, *I think*, not happy to lend where the occupier is family.

If your brother is going to be living there and you are not, I'm not sure whether there is a simple answer because for him it's a residential arrangement and for you it is a BTL arrangement.

If it does work out, you and your brother will be landlords, with all the necessary duties that that entails. Read this post:
http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

Will your mum be dependent on housing benefit? If so, you need to research the problem of 'contrived tenancies' to ensure she doesn't get the HB stopped.

TJ901

Thanks again, very useful info. Sounds as if we all need to pop in and see a mortgage adviser face to face where they can assess our circumstances.

I don't know the officialties/legality of it but I'm not sure deposit coming from someone on mortgage would be an issue as my mum is happy to give us the money first so the transaction is entirely coming from us.

I've also thought in the last few days that the amount they'd lend me will be somewhat reduced by the fact that I'll still be paying rent on another property (the one I'll actually be living in).

Mum currently only gets around £50 a month on HB, which is due to stop soon as she's taking on more hours at work which means she'll then be eligible for working tax credits (which is far more than she'd have got on HB).

Thanks very much for all your help, it's much appreciated. If anyone else has any thoughts, feel free to post.

Yorkie1

TJ901 wrote: »

Thanks again, very useful info. Sounds as if we all need to pop in and see a mortgage adviser face to face where they can assess our circumstances.

I don't know the officialties/legality of it but I'm not sure deposit coming from someone on mortgage would be an issue as my mum is happy to give us the money first so the transaction is entirely coming from us.

I've also thought in the last few days that the amount they'd lend me will be somewhat reduced by the fact that I'll still be paying rent on another property (the one I'll actually be living in).

Mum currently only gets around £50 a month on HB, which is due to stop soon as she's taking on more hours at work which means she'll then be eligible for working tax credits (which is far more than she'd have got on HB).

Thanks very much for all your help, it's much appreciated. If anyone else has any thoughts, feel free to post.

You still have to declare where it came from. The lender may well ask to see evidence of how you saved it. If you have lied and then get found out, then things could be far worse - not only are you likely to have the mortgage refused, but you also run the risk of having a fraud marker placed on your file, which will affect any credit or insurance you may wish to seek.

TJ901

Yorkie1 wrote: »

You still have to declare where it came from. The lender may well ask to see evidence of how you saved it. If you have lied and then get found out, then things could be far worse - not only are you likely to have the mortgage refused, but you also run the risk of having a fraud marker placed on your file, which will affect any credit or insurance you may wish to seek.

Oh, I'd tell them if asked where it came from. I just wouldn't make it sound as if my mother was expecting a stake in the house in return...if that makes sense?

Annisele

One of the problems with your plan is that the lender is likely to want your mother to sign something to say she's given the money to you as a gift, with no expectation of any future benefit (such as being allowed to live in the house). If she agrees to do that, she's put herself in a very precarious position. Lenders may not agree to it anyway.

lawstudent

Can your mother not be put on the mortgage application also?