Group mortgage

ambercelery

Hi

Can anyone help me on this matter? I obviously know about mortgages and joint mortgages between couples etc, but is such a thing as a group mortgage possible. It might seem like a strange scenario but i was wondering what income the mortgage lender would take into account if say 5 people wanted to club together and buy a property. Would they assess each persons salary and outgoings - or would it have to be mainly in one persons name?
Could it be resolved by setting up a company - each of the 5 people becoming directors of that company - and then the company applying for a mortgage. If this was the case, what is taken into consideration for the mortgage application ? is it how much money the company has ? or how much its directors have?

To follow this up, with an example where this may be wanted. 5 investors wish to put some money aside each month for their retirement. Pensions are not too good at the moment so they suggest clubbing 200 pounds per month each into an account (with contracts etc). Then using this money after a year to buy a property. The property is then rented out providing income and the 200 per month is still invested in the bank account. The bank account grows (hopefully) and pays off the mortgage and repairs on the property until the house is producing a profit for the owners (through rental).

Any help would be greatly appreciated?

Fairdo_2

In general, there are lenders out there that will deal with multiple applicants. Usually up to 4 people. However, 5 people could be considered by some.

Generally, there would need to be a good reason for this for residential purposes. Therefore, if it was to get on the housing ladder and begin occupancy, then the lender would normally expect the property to be of sufficient size for the applicants to occupy comfortably. (For example 5 bedroomed for single applicants, or 3 bed if it was 2 couples and a single applicant. You get the gist!)

Income multiples are generally less discretionary than for a couple on their own for example. Usually this would be 3x main applicant plus 1xeach other individual applicant.

You would also then get the legal complications to deal with. The issue of "joint tenants" or "tenants in common" and the simple housekeeping fact that,whoever is agreed to be the main applicant would be the favoured person for correspondence to go to. All issues that could spark gripes later on, if not fully agreed and adhered to.

If you are buying a house for investment and pooling funds and profits, this can ordinarily be done by setting up a limited company and buying in the limited company's name.

The issues on this one would be better discussed in detail with an Accountant. My understanding is that the limited company would be classed as an entity in its own right, therefore, as if it was a person. However, that is as far as I would go on that one!

The lenders available to lend to a limited company are somewhat restricted, but they are around.

Hope this helps.

p4nd

Does anyone know of such lenders that do deal with "group mortgages" ie >2 people?

Cheers

feisty1

feisty1 wrote: »

ignore my previous remarks..........lack of attention!!

How many people are involved?

Robert_Sterling_3

the symbol > Means greater than.

feisty1

never even noticed that!

Beckymarshall07

Check out share to buy - just google it. They've got a mortgage set up with Britannia. Me and hubby have this mortgage but when we applied discovered could have up to 4 people on the mortgage. We went on their tracker but think they have changed the mortgage to SVR

herbiesjp

Quite a few lenders will offer mortgages for more than 2 applicants.

However each has their own criteria and each will treat the income differently, when they assess multiples.

So while a particular mortgage may appeal to you, you may not be eligible for it

Best bet is to talk to a whole of market adviser, and discuss the whole scenario in detail

feisty1

herbiesjp wrote: »

Quite a few lenders will offer mortgages for more than 2 applicants. However each has their own criteria and each will treat the income differently, when they assess multiples. So while a particular mortgage may appeal to you, you may not be eligible for it Best bet is to talk to a whole of market adviser, and discuss the whole scenario in detail

All the above and most importantly the disadvantages of such a contract.............

herbiesjp

Spot on

So many implications of buying as a group, that you have to really work out is it worth it along with your exit strategy that everyone is in agreement with really