My brother wants me to take out a joint mortgage with me

quartzre

Hi,

I want to help my brother who is attempting to purchase a house in London and he suggested that I join him in a joint mortgage.

As London houses are so expensive I understand having me on the mortgage will increase the amount he can borrow. It will also make the mortgage more likely to be accepted. He will cover the deposit and the monthly payments in their entirity and I would just have my name on the mortgage form and would be jointly liable with him. I am not planning to even live in the property, which most lenders do not mind.

He's shown me his complete income and expenditure for the last 3 months and I can see he's easily able to afford the payments, he just needs another person to be able to afford the value. I trust him completely and I know he's an excellent budgeter and moneysaver.

I understand thee benefits for me, that it will improve my credit score and also when he remortgages in a couple years he will pass a share of any savings onto me. I wouldn't be able to afford a mortgage for the next 5 years and I'm not planning to take out any loans any time soon.

What are the risks of doing this?


Many thanks

Thrugelmir

quartzre wrote: »

He's shown me his complete income and expenditure for the last 3 months and I can see he's easily able to afford the payments, he just needs another person to be able to afford the value.

If the mortgage is affordable why does he need another person on the mortgage. Doesn't add up.

[Deleted User]

quartzre wrote: »

What are the risks of doing this?

Will you be able to afford the mortgage by yourself if he falls on hard times?

pjcox2005

Risks:


If you are a first time buyer then you miss out on the Governments first time buyer scheme so won't benefit from 25% increase on savings as an example. Also potentially higher stamp duty when you come to buy if still on mortgage/deeds (assume you would be on deeds if on mortgage).


Potentially won't qualify for principal private residence relief so any gain in value (your share per deeds) you'd be taxed on when your brother sold.


Potential inheritance tax issues on death etc.


Risk that your brother defaults as circumstances can change and you'd be liable for the mortgage and may have a brother unwilling to move out.


Relationship complications in the future if ownership of the property prevents you doing something e.g. house purchase, but to remove you would leave your brother in a difficult situation.


I wouldn't rule it out as I think family's can benefit substantially from acting together (e.g. not having to rent until circumstances change) but you need to go in with eyes open and a clear plan for what if scenarios. You may also want to consider other options which may be a better way to achieve what you are trying to do.

Malmo

I speak from bitter experience when I say don't do this. No matter how much you trust family members to do the right thing, matters can take the wrong or unexpected course through no fault of your own and your credit profile can be seriously affected. What happens when you want to buy somewhere of your own?

upoiupou

Thrugelmir wrote: »

If the mortgage is affordable why does he need another person on the mortgage. Doesn't add up.

My question also.

quartzre wrote: »

He's shown me his complete income and expenditure for the last 3 months and I can see he's easily able to afford the payments, he just needs another person to be able to afford the value.

What do you mean by "the value" as opposed to the payments?

If you can see he can afford the payments on his own, why wouldn't a mortgage lender see this?

iammumtoone

not a good idea see this thread

https://forums.moneysavingexpert.com/discussion/5516292

daughter helps out her parents, now fallen on hard times but unable to claim the benefits she needs as she part owns a house, her parents will have to sell their home. Neither the daughter or parents thought this situation would arise, unfortunately you never know what will happen in the future.

csgohan4

Money and family don't mix, don't do it, it will make it more difficult should you need to buy a house in future. Not to mention the additional Stamp duty.


Either way getting a mortgage is more than affording the mortgage payments, it's about affordability in general and your credit history

fxyzfxyz

My father has a joint mortgage with his brother from 22 years ago. They have grown distant over the years and due to communication problems they can't really negotiate on things regarding the house but don't confront each other out of respect/wanting to avoid an argument. For eg, my father would love to sell up and move up North, but my uncle won't really comply with any work that would need to be done to get all that sorted. Also, when it comes to remortgaging they disagree too. They're on an interest only mortgage and my dad wants to switch to repayment, but his brother again doesn't really comply. I'm sure he also has his reasons/side to the story though as well. I mean, at the time it was a fantastic idea for them but in the long term has caused them trouble. My father always warns me against mixing money and family, especially when it comes to property and business.