Shared Mortgages?

Lost_in_Grey_Matter

Hi all- wonder if you can help. My husband and I are both in our 20's and have been renting privately for 4yrs. We have decided it is time to buy our own house, as we are hoping to start a family soon. We live in Hertfordshire, and have a joint income of about £35k so could not get much of a mortgage. However, my brother in law and his wife are looking for an investment and have offered to help us out with a shared mortgage- ie they pay say 25% and act as sleeping partners. They said they do not mind about which house we buy and where, but would obviously want to safeguard their investment so they dont loose money, but they arent over fussed about how much they make- the main incentive is to help us out and have an investment which might benefit them more than a high interest savings account. Has anyone done anything like this before, or does anyone know where I can find out more information at all please? Thank you in advance!

autismmum

what ever you do decide, make sure of an exit that everyone is happy with, i own a 30 percent share in my brothers home as does my sister, however, my brother is cross that we wont let him borrow any more money against it, and so family spilts are happening, with no clear exit, such as what and who and when to sell, no one is happy, he feels insecure, and my sister and i feel we'd like the cash, so get your term or exit sorted, also what happens if either partys divorce or die? sorry but make sure its all in there.
hope it goes well though, what about housing assosiation % mortgages where you own so much and profit by the sale???

Lost_in_Grey_Matter

To be honest we are complete novices at this- a quick mortgage calculator has shown that we could get about £100-£110k mortgage, and a static caravan in this area sells for £170k so we have no chance on our own. We have a grade A credit rating, but no deposit and are so unsure of the area we wanted to research into it before committing with family or lenders.

Dan_Collins_2

Dont tell the lender that it will be a shared property. They will not like a shared ownership property with a private party. The best way is to have a contract drawn up with the solicitor. Remember the property is the lenders security and they will not want a 2nd charge or interest on the property when purchased. A standard shared ownership mortgage is fine as housing associations have the relevent clauses inside. Imagine the property goes down and they have to repo the property but dont get all the money because another party holds an interest!

Seek legal advice before you enter this and make sure all parties are clear from the outset.

sarkin

agreed I think this is a minefield also you will have to stretch the truth with the lender. I would have alook at shared ownership first.

Lost_in_Grey_Matter

Shared ownership in terms of us owning a percentage of the property and the lender owning part, and we rent his part kind of thing? Sorry, my husband has more of the finance mind, I get lost in the jargon of mortgages really! I just dont see how, other than this offer from our family, we are going to get on the property ladder. I dont want to be getting pregnant then applying to the council. I know we can pay- our rent is £750 a month atm.

Dan_Collins_2

Lost_in_Grey_Matter wrote: »

Shared ownership in terms of us owning a percentage of the property and the lender owning part, and we rent his part kind of thing? Sorry, my husband has more of the finance mind, I get lost in the jargon of mortgages really! I just dont see how, other than this offer from our family, we are going to get on the property ladder. I dont want to be getting pregnant then applying to the council. I know we can pay- our rent is £750 a month atm.

Standard shared ownership is where you own part (25-75% in most cases) and a housing association owns the rest and you pay rent for it. You can use a mortgage to buy your share. The housing associations lease will have special clauses that the lenders demand.

You can in theory part own with anybody however the lenders are not normally happy if these clauses are not in place as they protect the lenders interest.
Because you and the housing association own a % both parties can gain or lose in cases of property price decreases and increases.

With family you can set this system up via a solicitor but the lender may have issues.

It is a good idea and its better for you this way and cheaper. As I said before I would seek legal advice (Independant from your family) before you do anything.

Best of luck.

Lost_in_Grey_Matter

Thanks for your help- we definitely are going to seek legal advice, both separate to and with the family members in question. I have looked into shared ownership and there are very few HA that do such a thing in this area, and the ones they do tend to be expensive (ie I found one where you own 75% which costs £165k, and we just couldnt get that much together). I understand there are huge pitfalls doing this sort of thing with family, but I also know the family members in question and how they approach this sort of thing- personally I would rather part own with them than with another company of HA, but maybe that is me being naive again.