Joint mortgage_3 people

sam2015_2

Friend of mine is a family man with wife and children. They can't get mortgage on their own, mainly because of the high childcare cost and low combined salary. They are thinking of adding their long distance cousin who lives with them to the mortgage. Cousin is on good salary, single and will be staying with them in the new house until he gets his own place (in 2 year time) anyway. All first time buyers.
They'd like to go for 'tenancy in common' and like to sign him off in 2 years time. Can he take his name of this mortgage when the time comes without them re-mortgaging, through the solicitors perhaps?

Which lenders take 3 applicants? I guess many only take maximum of 2.

Anything else they need to consider?

KRB2725

I can't tell you all the answers, but I can tell you that someone cannot just take their name off of a mortgage. It can only be done if the remaining mortgagees pass affordability criteria by themselves.

Contemptuous

They need a broker for this.

I can think of lenders who will accept up to four joint mortgagees but will only take the first two incomes into account.

In two years time they would need to do a transfer of equity (through their existing lender) or remortgage and do the T of E at that point. The lender will need to assess affordability at that point to ensure those remaining on the mortgage can afford the repayments.

Thrugelmir

sam2015 wrote: »

They can't get mortgage on their own, mainly because of the high childcare cost and low combined salary.

Anything else they need to consider?

Will their situation going to have changed much after the 2 years has elapsed?

Won't the cousin want to take their share of the equity with them when they exit the mortgage and sell their share of the property?

Removing a "name" is not how mortgages work.

sam2015_2

They should be able to get the amount with just two incomes(friend and cousin) but wife would like to be on the mortgage as a third person.
In 2 years time They'd have very less or no childcare cost and wife would be working full time too so should be ok affordability wise but they are worried about the just in case situations such as.......
-what if one of them lost job or
-Lender's tighten the affordability and they couldn't afford to take on
- etc, etc...

Cousin is purely doing for mortgage purposes, has no interest in the share, hopefully he doesn't change. He is like their elder son.
Would the lender ask them to prove their relationship? I don't think they can prove he is cousin as it is a long distance ones.

Thrugelmir

sam2015 wrote: »

Cousin is purely doing for mortgage purposes, has no interest in the share,

If they are paying the mortgage. Won't they want the capital back that they've contributed?

getmore4less

Hi risk for the cousin stuck in the deal for a lot longer than they want.
They may have to accept that they won't be in a position to buy

Why not get a smaller place that does not need a room for the cousin?

What do the numbers look like?

deposit(where is this coming from)
house value
current salaries
salaries in two years

current rent(who pays it)

What is the proposal for the "lodger"
will they be contributing a nominal rent

To make this happen significant improvement of LTV over the two years will help.

silvercar

There are mortgages that allow people to help out without being on the mortgage and deeds.

Generally aimed at parents helping offspring, but the restriction may not be that tight.

In the finance papers today I have seen mention of Guarantor mortgages (Virgin Money, Buckinghamshire BS and Market Harborough), Helpful Start mortgage from the Woolwich, a complex mortgage from 'family building society'' that allows family members to chip in.

Look at the conditions, obligations and restrictions carefully. In some cases your own home is at risk if the young people get repo'd. Don't apply wildly to everyone as each full application will leave a footprint on your credit record. It may be safer to see a broker who should know the likelihood of acceptance.

amnblog

This is possible but not as straightforward as adding people on and taking them off of the mortgage.

Your friends need to consult a broker.

TBeckett100

Where money is concerned people can change

What happens if the cousin was found in bed with the Mrs? He can't be kicked out, she can't be kicked out as they own the property

Cousin can't be kicked out if they take a dislike to him (it happens) and any rent he pays would probably become a contribution legally to the mortgage which would affirm his right to a share of the equity

If they can't afford the house now, in a few years time of a rising market, how will they afford to borrow more on a similar wage when they can't 'borrow less' now.

It sounds like a can of worms and all hands are on the tin opener