Named on sister's mortgage: Good idea?

Spartan

Hi,

My sister is in her mid twenties and currently lives at home, she desperately wants to buy her own house and move out.

She has seen a modest property that she would like to buy, and knows she can afford. There is a risk that she will not be able to get a reasonable mortgage offer on her earnings alone, and has asked whether I would be happy to be named on her mortgage too - not having to pay towards the mortgage, just being there on paper so she can get one.

I am aware that this will mean that I am liable for payments if she does not make them, and this is not my concern.

All I would like to know is how much this will restrict my own borrowing power. I already have my own house so that's not a problem, but may well want to upgrade in the mid term (5 years plus).

Interested in views on whether this is a good idea or not really, since I am happy in principle and want to help my sister onto the property ladder.

TrickyDicky101

Some figures would help (e.g. your income, your existing mortgage (if any), prospective house value, mortgage required etc).

Also, note that you will have a potential CGT liability when you dispose of the property (or transfer the equity fully to your sister in the future) - irrespective of how you structure the mortgage repayments.

Spartan

my income = £37k
my existing mortgage = £125k (house value £140k)
her potential mortgage = 95k (house value £105k)

To add that my bf will be moving in with me soon and in due course added to my mortgage. His income is similar to mine.

I have no understanding of CGT, bar that I just googled it (shall read more), so any info on that would be greatly appreciated.

getmore4less

IT will complicate your plan to add BF do future increased lending

Will create a financial link that will be difficult to break as you will have no control over that.

Deposit and earning of sis are what will be important.

Spartan

In what way does it complicate adding bf?

kingstreet

Any new lender will at best treat your connection to this mortgage as a credit commitment and it will reduce what you can borrow, regardless of who is making the payments.