Son wants to leave mortgage with his sister

eastie_2

My son and daughter , to get on the mortgage ladder purchased a flat for £110,000 between them with a 25 year mortgage.
After 4 years their mortgage has now dropped to £90,000 and the flat is now worth about £125,000.
My son has now got himself a girlfriend and wants to get a mortgage with his girlfriend and wants to sell up.
His sister wants to stay put but her salary to carry on is not high enough.
She has savings of £15.000 but only has a salary of £11,000
So even if she reduces the £90,000 by £15,000 the bank says she hasn't got a big enough salary.
Question I am asking is me being the father could I with my wife be guarantors with me being on £25,000 salary and my wife £20,000 and a house worth £170,000 with £70,000 left on the mortgage(13 years left).
Any help or advice would be appreciated

beecher2

Doesn't the son want his share of the equity?

TBagpuss

Whether you could stand as guarantors will depend on your ages, and other financial comittments, as well as the amount of equity you have and your income.

I would also strongly recommend that you get some legal advice so you are absolutely clear about the implications of becoming a guarantor (it would be relevant if you and you wife wanted to remortgage, or move house in future, for instanance).

the property your son and daughter own has equity of about £31,000 (once notional costs of sale are taken into account) so your son would be entitled to his equity - of around £15,500, so your daughter would still need a mortgage of £90,000. Given this is more than 8x her salary I doubt any lender would be prepared to risk it.

Mojisola

eastie wrote: »

My son has now got himself a girlfriend and wants to get a mortgage with his girlfriend and wants to sell up.

His sister wants to stay put but her salary to carry on is not high enough.

I think your daughter has to look for somewhere else to live.

This kind of situation should have been covered by the original agreement they set up when they decided to buy together. (Too late for them but it might help others thinking of doing this.)

Wh05apk

Guarantor mortgages are few and far between now, ultimately the mortgage has to be affordable without resorting to the guarantors.


It could be however, that you could go onto the mortgage with your daughter, although there would then be tax implications to consider.

Dave_Ham

I think your Daughter can get pretty close to the amount with the right lender and a little bit more to put to savings.

Failing that and as said, one of you could be party but comes with other implications.

Speak to a broker all together, as Brother may also be able to have 2 mortgages if this is the desire..

Wh05apk

Dave_Ham wrote: »

I think your Daughter can get pretty close to the amount with the right lender and a little bit more to put to savings.

QUOTE]


I think the "little bit more" would need to be quite a lot?


Even 5x income would only be £55,000, and I think on £11,000 affordability would be a major issue.

Dave_Ham

Wh05apk wrote: »

Dave_Ham wrote: »

I think your Daughter can get pretty close to the amount with the right lender and a little bit more to put to savings.

QUOTE]


I think the "little bit more" would need to be quite a lot?


Even 5x income would only be £55,000, and I think on £11,000 affordability would be a major issue.

I have made some assumptions but I do not think way off.

So with the savings the amount required is £75,000. Lenders out there can go as high as 5.5 or even 6 times depending on the credit position.

I also assumed that at £11,000, most people would round down for a forum and therefore the figure may be £11,000 and some extra, potentially a bonus, potentially overtime or London allowance and suddenly not far off.

If the alternative is guarantor involvement, often parents may help bridge the gap from their potential resources.

My point was not to say it was achievable, but actually there may be a solution in the detail and a professional was required...

getmore4less

lets hope there is more thought put into the agreement with the GF. It needs a full set of exit clauses.

what about the son/gf buying out the sis?

she probably can't afford the bills

eastie_2

My son is going to wait for his sister to pay back the equity at a later date.
My daughter had a bone marrow transplant when she was younger and while disabled with loss of hearing wants her independence and is quite thrifty .
We was hoping to maybe pay half the mortgage as the property is over the road which is ideal with her circumstances.

Mojisola

eastie wrote: »

My son is going to wait for his sister to pay back the equity at a later date.

Make sure that gets documented so that it doesn't cause problems in the future.