BTL mortgage/tenants in common share

brisk

Person A and person B want to purchase a BTL property.

However, they want Person A to have a sole mortgage. Both Person A and person B want to own a share of the property as tenants in common. Is this possible? If so, can person B have a 99:1 in their favour?

HappyMJ

Agreed. It's not possible. The mortgage company needs security over the whole property not 1% of it.

brisk

I read about an instance where the bank allowed a mortgage to be taken by one person where the property was jointly owned -- they required a deed to be signed to protect the bank in case of repossession.

AdrianC

brisk wrote: »

I read about an instance where the bank allowed a mortgage to be taken by one person where the property was jointly owned -- they required a deed to be signed to protect the bank in case of repossession.

Jointly occupied, yes. Jointly owned? VERY unlikely.

kingstreet

Only one lender, HSBC, will allow more owners then borrowers and I have no idea if it would allow it on a BTL.

brisk

Ok. I guess we can ask the underwriters. If it is not possible I think we could create a Declaration of Trust detailing the shares of the property and what would happen to the proceeds of sale when the property is sold?

getmore4less

brisk wrote: »

Ok. I guess we can ask the underwriters. If it is not possible I think we could create a Declaration of Trust detailing the shares of the property and what would happen to the proceeds of sale when the property is sold?

Make sure you cover all exit senario, not just sale.

Mossfarr

Hi Brisk,

I have a few buy to let properties which are mortgaged. My understanding is that Where there are two (or more) owners they can only have an equal share of the ownership of the property. You may be confusing the ownership with the tax liability on the income. Where a property is jointly owned, the owners can apply for the tax liability to be split 'unequally' ie the higher % of the income can go to the lower rate tax payer. I think the split can be 90% / 10%. This avoids the higher earner going into a higher tax bracket. You need to check this as the position may have changed since I read about it!
There are quite a few publications in print on this issue or you can seek clarification from your local tax office.
mossfarr

brisk

Nope nothing to do with Tax.

If I have a joint mortgage with my friend (not married) then it weakens the mortgage application so we just want my friend to apply for the mortgage. However, we both want to own the property. Because I am paying the whole deposit I want to own as much of the property as possible...ideally 99:1 in my favour. When we sell we will divide up the net profits 75:25 in my favour.

HappyMJ

brisk wrote: »

Nope nothing to do with Tax.

If I have a joint mortgage with my friend (not married) then it weakens the mortgage application so we just want my friend to apply for the mortgage. However, we both want to own the property. Because I am paying the whole deposit I want to own as much of the property as possible...ideally 99:1 in my favour. When we sell we will divide up the net profits 75:25 in my favour.

You being on the mortgage should make little difference. It's a BTL mortgage which has a vastly different lending criteria. You don't even need an income to get one.

Why don't you buy this property on your own if you want 99% of it to be in your name yet none of the mortgage.

What if the property loses money? Will you pay/take 99% of the losses?

How are you going to split the monthly rental payment you get?

How are you going to split each expense you have?

It really needs to be 50/50 and everything is split right down the middle including the deposit, the mortgage expense and the profit. Anything else is inequitable.

What I would suggest is that you lend your friend half of the deposit required for the property so you are both contributing 50% each then have your friend repay you a monthly payment over let's say 5 years so you get your half of the deposit back....then I'd split everything down the middle exactly. I would agree that no-one exits this deal until 5 years have passed and the deposit borrowed from you has been been repaid back to you. I wouldn't charge interest that'll just confuse everything even further.