Mortgage & Equity Share

Loocie

Hi all, the son of a friend of mine is altruistic and generous, he's the youngest of three, and lives at home with his elder brother and his mum (the middle son lives away from home). The family home has just been sold, from which there will be enough equity to purchase a new home. However, his mum has some...shall we say financial responsibilities, that she wants to clear with the some of the equity. The new home will be purchased using the remainder of the equity, which won't be enough to purchase it outright, therefore a comparatively small mortgage will be needed to ensure enough funds are available. We think this will be around a 1/3 of the cost of the new home, possibly less.

'Matt' (18yo and working) has offered to purchase the £50, 000 mortgage required to buy the new home. The mother, Matt and his brother will continue to live there. Currently both boys contribute to the housekeeping and pay £300pm; Matt's mortgage repayments will be around the £300 mark, and the other brother will still contribute his £300.

Clearly things could be done differently, and we have had the conversation about what other options might be available etc.

My question is, how would others view what happens when it comes time to sell the property - for example if his mother dies/he wants his own place etc (whilst this arrangement is in place)? He has said, all he wants is for his mortgage to be paid off, then the proceeds from the house sale (the assumption is that there will be), to be divided equally between him and his two siblings.

My view is that he is purchasing a % share in the house by putting in the mortgage of £50k, which should grow in line with the value of the property, and at the point of sale, he should be entitled to his % value share of the home; and his siblings receive a 50-50 split of the remainder of the value? I hope that makes sense? But he is steadfast that he doesn't want that, as "it isn't fair to [his] siblings" to take more than them from the pot.

I'm asking for my own benefit really, so that I can learn something from his situation. We've recommended to him that he takes some independent advice, so that he can have his assets protected. He has already agreed that it'll need to be drawn up legally, so that there are no debates in the future, but he's very laid back about it all, which is great, but scary.

Thanks in advance, I'll be interested in your views
Loocie

getmore4less

If you service the debt then that is a good as cash.

This should be separate from contributions to running the place.

When sold he get that share but is responsible for all the remaining debt.

That is the fare way to do it.

One way to explain it what if he borrowed the money of you and paid cash for the house but paid you back separately.

Missed the example (death of mum) after the share paid for by the mortgage it would be a 3way split not 2 way or whatever she had in her will for her share.

getmore4less

£300pm towards housekeeping gives a pot of £900 that's quite a lot to cover council tax and bills is there a rent element.

Can the one taking on the mortgage still afford their share?