Buying sibling out

captainlongtoes

This does sound more sensible. Thanks for the advice, having a quick look on some websites and it looks like I may be able to afford a reasonable house in the area, though there’s a bit of work that needs to be done on this house before putting it on the market (plastering one bedroom, some painting and replacing downstairs carpet and electrical rewiring - the most important one).

getmore4less

rewiring makes a mess will require a complete redecorate,
generally not recommended to invest the money as you may not get it back.

do you want to live on a building site for months only to move?

xylophone

plastering one bedroom, some painting and replacing downstairs carpet and electrical rewiring - the most important one).

Why bother? Sell as is and move on?

gwynlas

It sounds as though you would not be able to afford the mortgage or upkeep of the family home but if you sell would be in a very good position regarding buying your own home. Depending on what you choose you might be able to buy outright or have a small manageable mortgage and outgoings. 
Have you any idea of what you would like? There are some people on the forum who are very happy to give constructive advice re selling and buying property. Persnally though I have mostly lived in flats both conversions and purpose built most of my adult life I would never recommend them unless it was an issue of affordability.

Emmia

captainlongtoes said:

So it looks like we may need to sell, and I find myself a home that I can put the approx £300k towards and hope to be able to obtain a mortgage on the rest? Sorry but beyond the very basics of a mortgage I’m new to all of this

Yes, so you'd have £300k deposit (less fees, stamp duty etc.,) you either buy a property which is covered by the "cash" you have, or you buy a more expensive property with the £300k acting as a deposit and a mortgage. 

Banks will normally lend 3 to 4 times your salary as a mortgage, so you could borrow another £100k - £150k or so, giving you a total budget of £400k - £450k for the purchase.  If you did go for a mortgage, the deposit size means you should have a good choice of mortgages as you'd have a good loan to value ratio (LTV) i.e. a £300k deposit would buy you 75% of a £400k property and you'd borrow the other £100k.

However, given your age, you'd probably only be able to get a shorter term mortgage which will push the monthly payments up affecting affordability, since banks still want their money!

To illustrate, if you borrowed £100k over 15 years on a capital repayment basis, it would cost you £630 a month at an interest rate of 1.7% (you'd pay £13,362 in interest over the 16 years) but if you borrowed the same amount over 25 years it would be £409 with £22,820 in interest over the 25 years. (I'm assuming the interest rate stays the same for the whole period, which it won't). 

You may want to go for a fixed interest rate for an initial period (usually 2, 3 or 5 years) which will give you certainty on the monthly payments, but may initially be more expensive than a variable rate (although if rates rise, you'll benefit in the fixed period)

It's probably worth having a play with some of the affordability calculators to see how the numbers work for you - most banks have them available on their websites.

captainlongtoes

getmore4less said:

Does your sibling need the cash or would they be willing to accept it as a debt where you pay it off from earnings.
right place and if big enough might be able to increase income through letting rooms longer term of if the holiday market picks up short terms.
depends how much you want to try and keep the place, if it is biggerthan you need the running costs will also be higher.

mortgage cost rough idea:
if we work on £300k over  25years its going to be around £1200pm, even 30years over £1k, getting interest only will be hard £375 which may be affordable.

 

Yes my sibling needs the cash. As much as I’d like to stay here, I don’t mind moving as long as I can stay relatively near kids’ schools, work, etc

captainlongtoes

getmore4less said:

rewiring makes a mess will require a complete redecorate,
generally not recommended to invest the money as you may not get it back.

do you want to live on a building site for months only to move?

xylophone said:

plastering one bedroom, some painting and replacing downstairs carpet and electrical rewiring - the most important one).

Why bother? Sell as is and move on?

I was under the impression I should get the work done to boost its value/sellability? If I don’t have to, it would be so much less stressful for me to be honest.

captainlongtoes

gwynlas said:

It sounds as though you would not be able to afford the mortgage or upkeep of the family home but if you sell would be in a very good position regarding buying your own home. Depending on what you choose you might be able to buy outright or have a small manageable mortgage and outgoings. 
Have you any idea of what you would like? There are some people on the forum who are very happy to give constructive advice re selling and buying property. Persnally though I have mostly lived in flats both conversions and purpose built most of my adult life I would never recommend them unless it was an issue of affordability.

I have kids so I’d like another semi detached house, I imagine neighbours wouldn’t appreciate the sound of my youngest’s heavy footsteps running around  

captainlongtoes

Emmia said:

captainlongtoes said:

So it looks like we may need to sell, and I find myself a home that I can put the approx £300k towards and hope to be able to obtain a mortgage on the rest? Sorry but beyond the very basics of a mortgage I’m new to all of this

Yes, so you'd have £300k deposit (less fees, stamp duty etc.,) you either buy a property which is covered by the "cash" you have, or you buy a more expensive property with the £300k acting as a deposit and a mortgage. 

Banks will normally lend 3 to 4 times your salary as a mortgage, so you could borrow another £100k - £150k or so, giving you a total budget of £400k - £450k for the purchase.  If you did go for a mortgage, the deposit size means you should have a good choice of mortgages as you'd have a good loan to value ratio (LTV) i.e. a £300k deposit would buy you 75% of a £400k property and you'd borrow the other £100k.

However, given your age, you'd probably only be able to get a shorter term mortgage which will push the monthly payments up affecting affordability, since banks still want their money!

To illustrate, if you borrowed £100k over 15 years on a capital repayment basis, it would cost you £630 a month at an interest rate of 1.7% (you'd pay £13,362 in interest over the 16 years) but if you borrowed the same amount over 25 years it would be £409 with £22,820 in interest over the 25 years. (I'm assuming the interest rate stays the same for the whole period, which it won't). 

You may want to go for a fixed interest rate for an initial period (usually 2, 3 or 5 years) which will give you certainty on the monthly payments, but may initially be more expensive than a variable rate (although if rates rise, you'll benefit in the fixed period)

It's probably worth having a play with some of the affordability calculators to see how the numbers work for you - most banks have them available on their websites.

This is very helpful, thank you! I‘ll have a chat with my sibling and do some more fact finding eg stamp duty, insurance, other fees, etc. I’ll miss this place but at the same time I would very much like somewhere to truly call my very own. 

Emmia

captainlongtoes said:

getmore4less said:

Does your sibling need the cash or would they be willing to accept it as a debt where you pay it off from earnings.
right place and if big enough might be able to increase income through letting rooms longer term of if the holiday market picks up short terms.
depends how much you want to try and keep the place, if it is biggerthan you need the running costs will also be higher.

mortgage cost rough idea:
if we work on £300k over  25years its going to be around £1200pm, even 30years over £1k, getting interest only will be hard £375 which may be affordable.

 

Yes my sibling needs the cash. As much as I’d like to stay here, I don’t mind moving as long as I can stay relatively near kids’ schools, work, etc

I'd avoid this, even if the sibling doesn't want the cash now, it basically means you owe them a big chunk of cash over a long period which could affect your relationship with them - plus, if you can't afford to pay a bank £300k (when interest rates are incredibly low!) how are you going to be able to afford to pay your sibling in a similar timescale, even if it is out of earnings??