Buying with a sibling

TBagpuss

nb73 wrote: »

I don't make a habit of quoting myself, but thinking about this again:



If your sibling paid you 50% of a fair market rent, could you use that to boost your mortgage payments to 50%?

You'd then each pay 50% of the mortgage and your ownership would remain 50:50

Why not provide that you sibling pays 80% of the mortgage but that 30% is in lieu of occupation rent for your share of the property which he is living in - that way, you each 'count' as paying half.

You could build into your agreement provision for you to start paying 50% of the mortgage if you move into the property or if he moves out of it.

He will be paying 30% rent and 50% mortgage while having 100% of the house to occupy, so it isn't unreasonable for him, and you will, in effect, be getting a return on your investment albeit you won't be getting it in cash.

pleasedelete

What happens when you meet the love of your life and want to buy a house together? You may well not be able to get a mortgage as you already have one and even if you do then you will pay 2nd home stamp duty. Will you be prepared to get your sibling to sell their home at that point?

Plus when you sell then you will be liable for capital gains tax as it isn't your main home- unlike your sibling. If you need to claim benefits in the future it may affect that as well. And any rental income may affect you student loan repayments (if you have one)

jkl2107

AdrianC wrote: »

The split should be whatever two grown adults decide is fair when they sit down and discuss it sensibly.

If you can't do that, then the whole thing is an atrocious idea.

Hmm, not sure that's an entirely necessary reply.. It's ok to ask for opinions, no need for pessimism. I have given you a snapshot of our scenario, other than that you have no need to question whether as "grown adults" we are capable of that or not.

For your interest... I can assure you we are capable of doing that but as I said, just asking for advice in case other people have been through the same scenario. Also, at that table you would need a solicitor, siblings or not as you can NEVER be too careful. Sorry if you had a bad experience so feel the need to intrude in that manner.

AdrianC

jkl2107 wrote: »

Hmm, not sure that's an entirely necessary reply.. It's ok to ask for opinions, no need for pessimism. I have given you a snapshot of our scenario, other than that you have no need to question whether as "grown adults" we are capable of that or not.

For your interest... I can assure you we are capable of doing that but as I said, just asking for advice in case other people have been through the same scenario. Also, at that table you would need a solicitor, siblings or not as you can NEVER be too careful. Sorry if you had a bad experience so feel the need to intrude in that manner.

You're talking about how to word the split of any equity after a sale. However you draw the deed up, the legal involvement is the same - and a solicitor is very unlikely to want to go near the internal politics of %ages.

I'm sorry if you think it's pessimism - it really isn't. It's reality. Houses don't stop costing money the minute you buy them - that's when they start. If you can't figure the split out between yourselves, then are you going to be asking for suggestions on how to split ongoing costs? What about if it's unclear whether a cost is due to the resident part-owner's actions or inactions? Seriously, this is the SIMPLEST question you're going to come across over the next few years of shared ownership, and if you can't figure it out over a pint, then you WILL come to regret going ahead.

Rough rule of thumb for when you're figuring it out - put yourself in the other person's shoes. If you wouldn't be just as happy as when you look at it from your own p-o-v, then it's either not fair or you're not being realistic...

jkl2107

Yes well like anything there is a risk involved but I completely understand what you mean. There is also of course, as pointed out, the factors of capital gains tax too to consider on my part. It is already decided that I won't buy for at least another two years anyway - due to my job circumstances - and by that point my sibling will either buy me out if they could afford too or we would sell to avoid the 2nd home stamp duty. Although easier said than done but as I said - there's risk to anything where money is involved. Thanks for all your viewpoints - definitely things to follow up with the solicitor especially the rent side of things.

pleasedelete

jkl2107 wrote: »

Yes well like anything there is a risk involved but I completely understand what you mean. There is also of course, as pointed out, the factors of capital gains tax too to consider on my part. It is already decided that I won't buy for at least another two years anyway - due to my job circumstances - and by that point my sibling will either buy me out if they could afford too or we would sell to avoid the 2nd home stamp duty. Although easier said than done but as I said - there's risk to anything where money is involved. Thanks for all your viewpoints - definitely things to follow up with the solicitor especially the rent side of things.

2 years - you may well make a loss after buying and selling costs. They would then need to be able to re-mortgage - which is harder than getting a 1st mortgage sometimes due to loan to value. Will your sibling really be able to give you your £25k (less costs) back in 2 years and then get a full mortgage for possibly a worse loan to value themselves?

Person_one

nb73 wrote: »

I see you gave the purchase price as £200000, so you are each buying 12.5% and the bank will own 75%

The bank won't own any. There will be a large secured loan on the property, but only the OP and her sibling will own it.

Person_one

jkl2107 wrote: »

Yes well like anything there is a risk involved but I completely understand what you mean. There is also of course, as pointed out, the factors of capital gains tax too to consider on my part. It is already decided that I won't buy for at least another two years anyway - due to my job circumstances - and by that point my sibling will either buy me out if they could afford too or we would sell to avoid the 2nd home stamp duty. Although easier said than done but as I said - there's risk to anything where money is involved. Thanks for all your viewpoints - definitely things to follow up with the solicitor especially the rent side of things.

Give this really serious thought. In 2 years time, the house won't just be an investment, it will be your sibling's home. They may even have a partner or a baby living there (even if it seems unlikely now, anything can happen, one of my siblings went from single and travelling to married with a baby in less than a year!), the house might be in negative equity, your sibling may be earning less, or unemployed, or unwell, you might be in a situation where you need to free your cash sooner than the 2 years, or where either or both of you can't afford to pay your share, and the mortgage gets into arrears.

Personally, I don't think its a good idea to buy property with anybody that you don't plan/hope to live with forever. Disentangling can be a complete nightmare even with the best will in the world.

ScorpiondeRooftrouser

jkl2107 wrote: »

Yes well like anything there is a risk involved but I completely understand what you mean. There is also of course, as pointed out, the factors of capital gains tax too to consider on my part. It is already decided that I won't buy for at least another two years anyway - due to my job circumstances - and by that point my sibling will either buy me out if they could afford too or we would sell to avoid the 2nd home stamp duty. Although easier said than done but as I said - there's risk to anything where money is involved. Thanks for all your viewpoints - definitely things to follow up with the solicitor especially the rent side of things.

The point is that if you have to ask advice from forums about what is fair, then you shouldn't do this. It's absolutely stupid. it's probably stupid even if you do absolutely implicitly trust the other person, but asking questions shows you don't.

If you find that unhelpful, that's not my problem. It's only your problem if you go ahead and do this ridiculous thing that can only ever be to your sibling's benefit.

But, feel free to do whatever you think is best. It's not my money and I don't care about you.

jkl2107

ScorpiondeRooftrouser wrote: »

The point is that if you have to ask advice from forums about what is fair, then you shouldn't do this. It's absolutely stupid. it's probably stupid even if you do absolutely implicitly trust the other person, but asking questions shows you don't.

If you find that unhelpful, that's not my problem. It's only your problem if you go ahead and do this ridiculous thing that can only ever be to your sibling's benefit.

But, feel free to do whatever you think is best. It's not my money and I don't care about you.

If you don't care, don't comment. Simple. Completely useless post on your part. I'm confused when it became an issue for people to ask advice on things... Nobody can ever be 100% sure on something like this. I would imagine there's a lot of now divorced people who thought they "implicitly trusted" their partner for them to turn around and take a huge chunk of their house away from them.

I will do what I think is best by looking into everything that's been mentioned above as well as what I have already discussed with my family which will remain confidential as some of the stuff above has already been looked into/agreed.

Don't assume..."stupid"