Owning House with Brother

pollyanna24

I own a house with my brother as he bought my ex out when he left me three years ago. At the time, this seemed like the best thing to do as I didn’t want to sell up and end up renting etc.

The house is worth approximately £265,000 and we have a mortgage of £120,000 on it. We are heavily overpaying in order to have the mortgage gone in 7 years.

However, my brother has now found himself a girlfriend (of course, I knew this was a possibility, but he made it to 35 without getting serious with anybody).

He has said that at the moment, he is happy with the situation as it is. At first, he was saying that he didn’t ever want to sell up (not even his half to me in the future) as he wanted the house as an investment.

Now, he has started asking in passing how much he is likely to get out of his half of the house which is making me think he is thinking of selling. When I questioned him, he said, oh no, not any time soon, maybe in a couple of years.

Now, of course, I’m freaking out. I have two kids and an income of about £25,000 a year. Should I suggest to my brother that we should stop overpaying so that I can have a healthy balance in my bank account in case he does decide he wants us to sell, or will it not make any difference really as if we keep on overpaying, then we will have less mortgage and therefore more equity?

Don’t think I’ll be a position to take on the mortgage myself as I don’t earn enough and I certainly don’t have the money to buy out his half share of the equity. Suppose I should just wait and see, go with the flow as they say. He’s only been with the girlfriend about 6 months and she has just bought her own flat (with help from her father) which she is paying a mortgage on.

In my ideal world (of course this rarely happens), we continue overpaying on the mortgage. Brother moves in with girlfriend. Brother stays on deeds as when we eventually sell (hopefully in a load of years), he will gain from any expected rise in value. This was the impression he gave me at first, but now I’m feeling like I’m on shaky ground. Ho hum.

BitterAndTwisted

Ask him what he thinks he might want to do.

At the moment his relationship is quite new, and his g/f has just bought a property on her own. If they were thinking about buying together any time soon this wouldn't have happened.

Person_one

Its always risky to own a property with somebody who you don't actually plan on living with for the rest of your life!

Really, you should both have been viewing this as a short term solution and should have had a plan to get out of the arrangement as soon as possible. I don't think I'd have spent money overpaying to be honest. Is the money gone completely or is it in one of those 'offset' accounts and you can still access it?

If you were to sell, you'd have a good chunk of cash with half the equity, would that plus a small mortgage be enough to buy a new place for you and your kids?

RAS

You have a mortgage of £120K and are over paying?

How much is actually left on the mortgage?

Do you have a will by the way?

And is this a joint tenancy or tenants in common?

Acc72

RAS wrote: »

You have a mortgage of £120K and are over paying?

How much is actually left on the mortgage?

Do you have a will by the way?

And is this a joint tenancy or tenants in common?

In addition to the above, the house is valued at £265k (i.e. there is £145k equity in the property?).

You mention "a" house - do either you or your brother live in the property, if not - who does live there, do they pay rent etc.

There is a lot of information that is missing - eg. are you married ?

Also, you need to have this conversation with your brother now before he gets married - things can get a lot more difficult unless this is structured to take into consideration as many eventualities as possible.

pollyanna24

It's a Nationwide mortgage and when we got our last statement, it said we had money in an overpayment reserve thingie, which I assumed meant we could take it back with no questions.

But if we do this, and split it (as we have made sure that we have paid exactly the same in all of this), then we will just end up with a bigger mortgage again.

Someone asked how much is actually left on the mortgage, there is about £120,000 or thereabouts left to pay back. Not sure of the relevance of the question, but it's the same answer as in my original post.

No will, yep, and I know this is something that needs sorting out.

And it's a joint tenancy.

If I was to sell, think we'd each end up with about £60,000-£70,000 and I've looked up mortgages and I could get about £80,000. There really isn't anything around here of that amount and I need to stay close to London as that is where my job is.

RAS

Do you realise that if you die the children get nothing and your brother gets the house as the sole survivor?

How much did your brother pay to buy out your husband. With two kids your ex would probably have been granted about 30% of the value? And maybe not to be paid until the youngest was 18 years old??

pollyanna24

RAS wrote: »

Do you realise that if you die the children get nothing and your brother gets the house as the sole survivor?

How much did your brother pay to buy out your husband. With two kids your ex would probably have been granted about 30% of the value? And maybe not to be paid until the youngest was 18 years old??

Yes, I need to get sorted on the whole will thing and was going to look into tenants in common with 50% each.

My brother paid him half the equity that was in the house at the time which was £20,000. What do you mean my ex would have been granted 30%? And what would have been paid when my youngest is 18?

pollyanna24

Acc72 wrote: »

In addition to the above, the house is valued at £265k (i.e. there is £145k equity in the property?).

You mention "a" house - do either you or your brother live in the property, if not - who does live there, do they pay rent etc.

There is a lot of information that is missing - eg. are you married ?

Also, you need to have this conversation with your brother now before he gets married - things can get a lot more difficult unless this is structured to take into consideration as many eventualities as possible.

Both me and my brother live in the property. It was my home and my ex moved out and my brother moved in.

It has three bedroom, one for me, one for brother and one that my children share.

I was never married. My ex moved out and because I wanted a clean break, my brother paid him half the equity that was in the house. My ex pays me maintenance every month.

pollyanna24

Acc72 wrote: »

In addition to the above, the house is valued at £265k (i.e. there is £145k equity in the property?).

You mention "a" house - do either you or your brother live in the property, if not - who does live there, do they pay rent etc.

There is a lot of information that is missing - eg. are you married ?

Also, you need to have this conversation with your brother now before he gets married - things can get a lot more difficult unless this is structured to take into consideration as many eventualities as possible.

And yes, there is that much equity in the house which would get halves when we sell up.

If we change to tenants in common though and he does get married, then his "wife" (if she ever becomes that) would be entitled to his half, right?

RAS

pollyanna24 wrote: »

I was never married. My ex moved out and because I wanted a clean break, my brother paid him half the equity that was in the house.

That makes the difference. If you had been married the courts would probably have allocated 60+% (70% if the kids are young) and you may not have had to buy him out for years.

Not being married makes it harder.

Can I suggest that you stop over-paying the mortgage and you start saving that amount into an account so that you have more money.

And find out what this extra mmoney in another account is from over-paying???

Are you giving money to the bank that they are not paying interest on and not allocating to reduce your mortgage value? If so, take some proper advice.