Mtg with best friend? Advice Please

waddy80

Ok, So this is a bit complicated so bear with me:

Approx 12 months ago my best friend bailed her dad out by taking on the mortgage for the family home. She is a teacher, salary approx 24k. She was living with parents at the time so just took on more of the financial burden. This was really due to her fathers large debts and his own business.

She took out a mtg of 85k (repayment), the house is worth approx 170k. She is a only child so the equity has been transferred to her and it is just in her name. Dad pays approx 50% of the mtg in cash to her, and can now afford more as he has a full time job. There is really no chance of him getting a mtg. as his credit rating is :eek: .He possibly could nearly pay the full amount.

She is now getting p***ed off with staying at home (shes 27, and quite independent) and wants to move out (again). Her long term boyf is not in a position to move in with her due to various reasons. However she wants to keep the mtg and current house in her name.

Here's the bit where I come in:

We have always spoken about investing in property, and wonder if it would be a good idea for us to buy a property together for her to live in. The local market for flats or two bad terraces is such that we could pick something up for approx 100k.

However, I already have a mtg (90k) joint with my boyf, house worth approx 160k. I also have a few debts (DFD Jan 2009), but could afford to pay towards her property for investment purposes (save at the moment, and this would replace my regular savings). BTW all my debts are on low interest, I like having both savings and debts.

I have two jobs, total income approx 22k. (plus frugal life and ebaying!) Boyf earns approx 20k.

I'm not concered about buying with her, or affording. It's likely we would get a two bed so she could have a lodger and some income.

What I am concered about is how to do it. Do we both raise some equity on existing mtg's. Get a joint mtg? Does she have to change family home to a buy to let? Do we have a chance????

carolt

I don't know your circumstances, so forgive me if I'm barking up the wrong tree, but I'd check this out very carefully. Whilst helping your friend out sounds really kind, assuming you are both of an age where settling down/having kids is not impossibly far away, maybe it's best not to take on major financial commitments long term particularly with the risk of the housing market crashing and you losing your shirt (not to say your friendship...). Your salary level is OK but not high enough to support 2 mortgages if you had a disagreement with your friend or she couldn't cover it, or if you stopped earning altogether due to kids etc.

I'd think about it and see if there's another way you can help her - renting has a lot to recommend it at the moment, as house prices start to fall.....

Good luck.

herbiesjp

Your friend could change her current property to a BTL - her parent's rent would then pay the mortgage.

She would then be able to get a new residential mortgage for her to move into if she wanted