Brother wants to take out joint mortgage against my will

Phil1111_2

Hi all,

My brother wishes to take a buy to let mortgage out on a house that we have both inherited. The property at the Moment is mortgage free and held in equal shares.

He wishes to take out 50k and I would have to be a co signer for a mortgage I would not use or want. I would simply be signing the paperwork. As you can imagine this has caused much trouble.

Question is, is that he has claimed all along that it’s risk free for me and his financial advisor has told him it would not affect my borrowing . I cannot see this as being correct ? Am I right?

Thank you.

Thanks

davidmcn

Of course you're right. How could signing up to a 50k loan be "risk free", or not affect your borrowing potential? Why would you want to sign up to a loan if you're not getting any benefit out of it?

PasturesNew

What is your current situation?

No loan is ever risk free. Going into anything financial with family/friends is often fraught with issues in the future if things go wrong or if one "wants out".

Why can't he do it on his own? Why can't he just buy your half from you and go it alone?

enjoyyourshoes

Why not sell the asset and split the proceeds ?

He can do whatever he wants and you can do also?

If you have opposite attitude to risk it may mean staying 'Brothers who talk' for a bit longer.

TBagpuss

It seems unlikely.

You'd have to declare it on any future mortgage applications. It might not make much difference, assuming that the rental income was enough to cover the mortgage, but it would have to be declared.

It would probably be fairly low risk, particualrly if £50K is significantly less than his interest in the house worth, and you could build in security by having a formal agreement with your brother that he is solely responsible for the repayments and will indemnify you (i.e. explicitly agreeing that if he fails to make mortgage payments, you can claw back anything you end up paying to the lender, from him) and that the mortgage is to be cleared from his share of the sale proceeds if the house is sold, but it has some risks.

If your brother is not able to met the mortgage payments then you would be liable to the lender. If the reason he couldn't pay was because you had void periods, could you afford the mortgage payments without the rent? Could he? In a worst-case scenario you might end up having to sell the property (or it being repossessed) in order to clear the mortgage.

Does your brother own another property? Is there a reason why he wants to borrow against this one and not his own home?

An obvious option if you can't agree would be to sell the property and then you can each spend, or invest, your share of the proceeds as you want (and if he wanted to buy your share of the property and take out a BTL mortgage to do so, then he could do that, or if you wanted to keep the property, you could look into buying him out.

molerat

What is going to happen to the £50K ? A joint mortgage means you are jointly responsible for paying it, if he defaults you will be chased for the payments and it could lead to the house being repossessed and you losing out.

Phil1111_2

Just because I’m his brother I suppose. He’s upto his eyes in debt and has a poor credit rating. He wanted to take this mortgage out interest only over 25 years.

Just wanted to check with the experts on here that I’m right , and whatever his financial advisor was saying was incorrect. He also wanted to sign a letter of indemnity but I told him it was only as good as the person signing it.

My feelings are that if anything happened the banks would chase me. The property would be under threat too and it would affect my future borrowing. I know rules are different with buy to lets but I’m guessing all above is still accurate.

Thanks

Robin9

If he can't buy you out could you buy him out ?

Phil1111_2

The house which was my mum’s has been rented out for the last 3 years to a great Tennant.
So if we decided to sell she would be homeless and the property would be empty until it’s sold. However long that is.


He’s bought a house worth 460k then decided to do renovations. Obviously without the money to do so. I think the house is currently un livable in due to him deciding to knock walls out etc.

I have a well paid job however it’s very insecure and in a specialist area.

We haven’t spoken for ages regarding all this. As you can imagine it’s very upsetting.

borkid

I'm not sure if this would work but IF you had the £50K to lend would you give it to him in exchange for a greater share of the house?

Personally I wouldn't help out at all. He has debts and has taken on a house without being able to afford to renovate it and is now expecting you to help him out. He sounds irresponsible regarding money.

TrickyDicky101

You may be able to sell the property with a sitting tenant (and could maybe accept slightly less from the buyer if you are that concerned for the tenant)?