3 person mortgage

Murfalurf

My husband and I are considering a 3 person mortgage with my father in law and wanted some opinions / advice on a couple of points if anyone can help?
My husband and I are both in our late 20s and have always rented. Father in law had a mortgage and sold his house at a pretty significant profit before the bottom fell out of the market and has been renting ever since. I have a pretty poor credit history (naivety more than anything else, but basically numerous applications that had been turned down which I'm sure have disastrously affected my credit rating - I rather stupidly hadn't realised every time I asked for a loan that it would flag my credit score) my husbands credit rating is better, but not perfect, and father in law's is excellent.
My husband and I are pretty certain we won't get a mortgage just ourselves and father in law (mid 60s) won't get one himself either and is as sick as we are of renting.
As it stands we are looking at father in law, who is very flexible, either being a guarantor or supplying the majority of the deposit or both. Can he even be a guarantor without a property himself though? He doesn't necessarily want to be on the mortgage himself, as not only would it limit our repayment period, but he basically wants the house to be ours as long as he can live there. We have lived with him previously and he lived with us as well for a period so I'm well aware of the dangers of moving in with the in laws and the many, many pitfalls that could happen. Before we go down the route of brokers, estate agents and drawing up legal contracts etc is the anyone here that could advise:
Will we even be considered for a mortgage given my bad credit history?
Is it possible for father in law to be a guarantor with out a property of his own?
Would the mortgage, given my bad credit history, have to be in all 3 names therefore making it a much shorter repayment period given father in laws age?

angchris

I had a mortgage joint with my mum and dad as I would of been unable to do it on my own, however that was in 2000 when they were almost throwing mortgages at you. It worked out great for us.
my partner and I have just bought another house, we had awful trouble getting a mortgage and that's was with 100k to put down which was over 50% of the house price and that was with excellent credit history etc.
They will only give your dad the amount of years he has till he is of retirement age so monthly payments would be extortionate if he did get a mortgage.
My advise would be for you both to really work on your credit history, I think it's 6 years till things drop off it. and start putting money aside for a deposit, get yourself prepared. And in the meantime there's no harm in visiting an independent mortgage broker because there are hundreds of mortgages out there, he might be able to find something for you with a specialist company which of course means paying over the odds to get it all organised but we still thought it was worth it versus no house at all! Good luck.

Annisele

If your FIL is going to be contributing to the deposit and living in the house, then I think he will need to be named on the mortgage. (If it was only one of those two things, I wouldn't be so sure).

Any lender is going to want to make sure it can repossess the property if the borrowers don't pay. If FIL contributes to the deposit and lives in the house, he's likely to have some ownership rights (even if he isn't named on the deeds). If FIL isn't also a borrower, the bank can't hold him liable for repayments. So, if you stop paying, that makes it very difficult for the bank to evict FIL from the property. Bank doesn't want to put itself in that position, so won't lend in the first place.

In theory you can be a guarantor without owning a property, but you can't be a guarantor unless you can persuade the bank you're good for the money. That usually involves having a property or other substantial assets.

Is your credit history really that bad? If it's *just* lots of searches - and no bankruptcy/CCJ/defaults/late payments - then I'd be surprised if your credit history prevented you getting a mortgage. You might still fall down in other areas - eg level of income or deposit - but I wouldn't expect a bundle of searches alone to be an impossible stumbling block.

You and your partner could get hold of all your reports from the credit reference agencies (will cost you £2 x 6), and then take then together with your income and deposit details to a decent broker. That should give you an idea of what is possible.

Dave_Ham

As suggested you do need to do anything at this point other than get both of your Experian, Equifax and Call Credit reports.

Get these to a broker and run through the detail and they can tell you if achievable.

Given what you have around you, I would be confident of a solution although much will depend on your deposit as a % of the potential purchase price.

10% very tricky, 15% and some flexibility is applied and the world is an easier place with 20% +

Once you have an Agreement In Principle you can worry about Estate Agents, Solicitors etc.

All the best

Dave_the_Ginger_Cat

Another factor to take into account is FIL's age. Most lenders will not lend into retirement unless the guaranteed income stream will support the mortgage well into retirement.

I would personally see a no-fee broker now. They will understand the whole of the market and you need not make any commitments now. There also are a number of brokers who post here who may be able to help