To buy a house with a family member?

[Cherrymartini]

I separated from my ex two years ago. My dc and I currently live in the family home and my ex moved out and is a rental place. We need to move out of the family home soon as its too expensive and will split the equity between my ex and I.

I have a lawyer and we are in conversations about the division of the equity/ pensions etc but I have a rough idea of the amount of money I will probably have to buy a new house for my dc and I.

Basically, I won't have much. And I don't want to get a mortgage as I'm on minimum wage and every penny I have will be needed for living costs. I want to stay around the area we are in for the dc's schools and familiarity etc.

At the moment I would be able to afford something pretty small, run down and in a not very nice area.

My cousin (who I'm very close to and knows my situation) has offered to lend me a large amount of money. This would mean that I could get a much nicer house for me and the dc. My cousin is extremely well off and says he doesn't need to be paid back in the short term, and that I would just need to leave the money to his children in my will.

But we would need to work out whether or not he'd want to put the money in as a percentage of the property price, and if so the amount of money I owed him could go up or down depending on house prices. Also what would happen if I wanted to sell the house and move on, and lots of other scenarios.

He is very financially savvy and we would both want to get an agreement/ contract legally drawn up before we went ahead with this, and both look at the pros and cons together before coming to a decision. Although he says for him there is no problem at all and he is very willing to go ahead with it.

It seems like such a big thing to do. I wouldn't want to feel like I don't completely own my own home, or am "obligated" to anyone, but equally if the choice is between a small, cramped flat for me and my kids or a nice, more spacious house with a garden, it seems very tempting.

My cousin is very trustworthy and I have always thought he's got a really good character. But you always hear about how things can change where money is involved.

Does anyone have any experience of this?

I would have thought that a good solicitor would.be able to write up an agreement that protects both of you

Find a good one and ask... good luck

What a nice cousin. Would it be possible to clarify what ‘in the short term’ actually looks like? Perhaps he would be willing to state in the legal agreement that he won’t sell before DC have finished education or something similar?

If it all checks out I would accept because if you don’t you are looking at living somewhere much less nice unnecessarily.

Good luck, do update when you are sorted.

@MatildaTheCat I know, I was honestly totally overwhelmed and so grateful for his offer!

"Would it be possible to clarify what ‘in the short term’ actually looks like?" He basically meant that I don't have to pay it back as long as I'm alive, I would just need to leave the money to his kids in my will. He said he doesn't need the money.

It does sound like an amazing offer, I just think I'm cautious as having gone through a long marriage which turned out to be a bit toxic, I have been trying ever since to be as independent and self sufficient as possible. And I was feeling that accepting my cousin's offer might be a step back. And I was also worried as you hear so many stories about when money is involved with family and friends, the relationship can suffer.

But I think as @SamphiretheTervosaur said, a good legal contract would hopefully protect us both

You’re right to hesitate and think about it carefully, but it could be a good solution. DH and I are doing this for my sister. She wanted to move but in an expensive area couldn’t afford the type of house she wanted. DH and I agreed to put a fixed amount into her new house purchase, and when she bought the house we worked out what percentage of it we owned - it worked out at something like 27%. We then paid 27% of the necessary renovations.

You need to have all eventualities covered, and recorded by a solicitor. We have it written down that we will be responsible for 27% of any structural etc. work on the house (e.g. roof repairs) and my sister can live in the house as long as she wants, or sell it and buy a new one using our portion. When she dies or moves into a care home we or our children get 27% of the sale price back (this is written into wills).

From our point of view it helps her and is a sound investment for our children. From her point of view, I don’t think it worries her at all that she doesn’t own the house 100%. She makes all the day-to-day decisions without consulting us.

You just need to have everything absolutely clear from the start, written down in a legal document, exactly what sort of expenses your cousin would be liable to contribute to. New guttering? Probably. New boiler? Probably not. Redecoration? No. Come up with as many possibilities as you can think of, and write them down with a copy for each of you, so that you will know exactly where you stand and there is never a likelihood of you and your cousin disagreeing and falling out.

@Theonebutnotonly Thank you for all that information, that's really helpful. I hadn't even thought about who would pay for renovations, any expenses etc. As you say it would be very important for my cousin and I to think about, and clarify all the possibilities, so that there would be no ambiguity.

That's lovely you have helped your sister, and it's great to hear that this is a situation that could work out. And it's also good to hear that you feel it's an investment for your children as well as helping her. I think I haven't wanted to feel like my cousin wouldn't benefit at all from the situation, but I'm sure he would be looking at it as an investment too (as well as helping me), so it could potentially benefit us both.