Never had a mortgage.... but about to get one, question

[Deleted User]

Thank you all again, I think I have got my brain around this - as I will be paying 50% of my sisters mortgage with no return in the foreseable future (and getting the mortgage in the first place based on my income, not hers), I would think that she would be fine with that arrangement - we are in this together for a good few years!

For those of you who haven't read previous posts, my sister and I "own" 50% of our mothers home, and when she passes, we will inherit the lot, which once sold, would pay off this mortgage and any "money" that we may owe each other at that point - which will be many years down the line, but we can only deal with the situation we have in front of us now.

Thank you for all your advice, I really do appreciate it, expect to see me back here again very soon.

BTW - my sis literally just accepted an offer on her house and is now about to start putting an offer in on her new home.

[Deleted User]

JimmyTheWig wrote: »

It sort of doesn't matter where the money comes from for the kitchen. If you want to look at it as mortgage money that is fine.
But it obviously has to come from somewhere.

Lets say your sister has £50k in equity from her sale.
You need £10k, between you, for the costs of the move (stamp duty, etc).
You, personally, need £10k for your kitchen.
The property to be purchased is £200k.

So you need to pay out £200k+£10k+£10k = £220k.
And you have £50k.
That means you need a mortgage of £170k.
This is 85% LTV (as 170 is 85% of 200).
It isn't the 75% LTV that you might expect from having a 25% "deposit".

If the sale and purchase happening at the same time? I.e. is your sister moving from the property that she is selling to the property you are buying together?
If so, the money from the sale of the house will go to the solicitor.
The money from the joint mortgage will go to the solicitor.
The solicitor will pay off the old mortgage.
The solicitor will pay for the new house.
The solicitor will pay any costs.
This will all go on a "completion statement", which ends in an amount of money that either you owe the solicitor or they owe you. In this case it will end up that the solicitor will owe you £10k, which he will give to you. You can then spend that on improving the house you've just bought (common), going on a luxury holiday (not as common), doing up your existing property (very rare) or something else entirely. it is your money. It is up to you what you spend it on.

The important thing is that you work out how much mortgage you need to include the £10k for your kitchen.
That will result in a lower deposit being used to buy the house than if you didn't borrow money for your kitchen.
And so it is the same as if your sister gave you £10k from the deposit money.

Phew, thank you, I think I have got it, although your answer seems to differ from others and is more my original understanding.

And, yes, the plan is to go straight from one jointly owned property with her husband to one jointly mortgaged with me. Geez, my head hurts, I am on a steep learning curve.

JimmyTheWig

goochie wrote: »

although your answer seems to differ from others

I think my answer is the same as others have given, but approaches it from a different point of view.