Mortgage Advice

[Spud1985]

I won't go into too much detail, but my younger brother is looking to buy his first house. But is struggling to get a mortgage due to the amount he earns for anything half decent.

I've said I will go in with him to help him get a decent place, put up half the deposit and also pay some of the mortgage each month but I will own x% of the house. He's happy with it and so I am. He gets a house and I get an investment.

But I've got a mortgage on my own house, and I obviously won't be living in the house I buy with my brother (it will just be him and probably his girlfriend) Does this effect what mortgage we can apply for?

Any advice or pointers in the right direction welcome.

Thanks

[craigjm]

If you are not charging him rent or making a profit from it then no it doesn't. You are allowed to have more than one mortgage if you so wish. What you do need to do though is draw up a contract with the solicitor setting out who owns what etc in case it all goes sour at some point.

[Spud1985]

craigjm said:

If you are not charging him rent or making a profit from it then no it doesn't. You are allowed to have more than one mortgage if you so wish. What you do need to do though is draw up a contract with the solicitor setting out who owns what etc in case it all goes sour at some point.

Thanks.

Not charging him rent as such but we've spoke about payments for the mortgage. And for discussion purposes say the mortgage was £600/month I would pay £150-£200 (pending what % on the house i owned - 40-50%) and him and his girlfriend would cover the difference

How we worked it out was we would split the mortgage x% and y% and then his girlfriend would contribute directly to me for living there, so it could be looked at as rent I suppose. How would that effect the mortgage? Could we keep that out the equation and sort it out between us?

[QBee]

Muddy waters make for problems when they splt up. Sorry, I should say IF they split up. But you need to plan for when, ie when it gets messy.
In the application you need to notify the mortgage company if there are going to be any adults living there other than the mortgagees.
Any agreement regarding tenancy and rent should be on a legal basis, contracts drawn up. Consult a lawyer, or regret it later. It won't cost you a lot.

[Steve Evil]

I'm in this situation myself. My brother and I own a house together, his girlfriend lives with him and covers my half of the mortgage. I have also just taken out a mortgage with my wife on our house. In terms of getting the mortgage, your affordability will be the main issue. When my wife and I came to get our mortgage, the mortgage payments on the other house had to be taken into account and this affected what we could borrow.

As an example, we were told we could borrow up to around £350,000 between us, but the mortgage cost of the other house had to be taken into account with that (and you'll be held liable for the full amount, not just half). The house my brother and I own is mortgaged for £150,000, so that knocked £150,000 off what my wife and I could borrow, meaning that came down to £200,000. This will depend on the lender though, as some will take into account the full amount on the mortgage and others will just look at the monthly payment and take that off.

Edited by Steve Evil on Tuesday 2nd April 13:17