Active discussions

Meet the Other Phone. A phone that grows with your child.

Meet the Other Phone.
A phone that grows with your child.

Buy now

Please or to access all these features

Talk
Relationships

Mumsnet has not checked the qualifications of anyone posting here. If you need help urgently or expert advice, please see our domestic violence webguide and/or relationships webguide. Many Mumsnetters experiencing domestic abuse have found this thread helpful: Listen up, everybody

Original poster

What is the fairest way to buy this?

60 replies

Tripletsfun · 18/11/2019 08:08

Not sure if this is the right place to ask but would appreciate any advice about this.

I am buying a one bed flat with my sister. It’s the only way I can afford it as my salary alone would not give me the mortgage. I am putting the whole deposit down and will be living in the flat. I plan on paying for renovations and also all expenses, mortgage payments and bills. My sister will not be living there and is renting elsewhere. She does not own her own property.

What is the fairest way to own this?

OP posts:
KnickerBockerAndrew · 18/11/2019 10:56

Unless she is on a massive salary, she will find it difficult to get a second mortgage, and if she does, the terms will be tough (I have just been through this.) I also had to pay a massive second home tax, as would she. It's not really fair on her to do this.

combatbarbie · 18/11/2019 10:58

Terrible idea for your sister. I done this for my parents and so when it came to me buying with my husband I couldn't take advantage of any 1st time buyer deals and had to pay another £7000 on top because it was classed as my 2nd property!!

HundredMilesAnHour · 18/11/2019 11:05

I think you're being selfish OP. This idea is really detrimental to your sister's future but you don't seem to care / understand that. Be a better person and wait until you can afford to buy on your own without dragging your sister into it.

LemonTT · 18/11/2019 11:06

The only fair resolution if you take out a joint mortgage is for 50% of any equity that accrues under the mortgage to belong to her. That’s what her 50 % stake in the mortgage legally means.

She will be incurring risk and financial penalties as a result of taking on the mortgage with you. She would be entitled to live in the home. She would be entitled to rent her share out at market value. This may be more than the cost of the mortgage and maintenance.

I would tell you no on the terms you are offering.

GiveHerHellFromUs · 18/11/2019 11:08

@Tripletsfun are you intending on buying her out at some point?

UnicornsExist · 18/11/2019 12:39

You would do better to have your sister or better still, your parents act as a guarantor on a mortgage in your name. They are mortgages out there for first time buyers which offer this. I would suggest that you go to a good mortgage broker and let them do what they are good at - finding a product to fit your circumstances.

Quartz2208 · 18/11/2019 12:48

I think you and your sister are massively underestimating the impact of her being on the mortgage and how it will affect her (and getting her own mortgage in the future)

And exactly how would you pay of the money she is going to lose through this

There is no fair way here. What about getting a guarantor?

Original poster
Tripletsfun · 18/11/2019 13:06

Ok - so what I figures is I would pay for any costs she incurred as a result of being on this mortgage - so any loss in terms of FTB and extra stamp duty. As it is she is not paying anything towards this purchase apart from lending me her name so I can get a mortgage. She is on a high salary and could get a mortgage in her own right. I can afford to pay for the extra costs should she decide to buy in the future or buy her out the 10%. I was just wondering if the 10% is fairer as it would cover the extra costs and a bit extra as a sort of gesture towards her helping me like this.

I take the point of people saying it’s selfish etc. But the situation is what it is. My mortgage is cheaper than me renting and gives me far more stability. My sister is also happy to help me and with what it implies for her. I just want to make sure I am being fair to her. I do feel that in a situation where I can easily afford my mortgage repayments but simply cannot get a mortgage due to the costs of housing it is what it is and you try to figure out the best way. I will be honest I don’t see how it is any different to people who get a lot of help from their parents. I am not taking any money from her and plan on reinbursing her for her monetary loss in putting her name on it.

OP posts:
GiveHerHellFromUs · 18/11/2019 13:14

How can you afford to buy her out if you can't get the mortgage yourself? Surely put that extra money down as a deposit instead so you're borrowing less and the bank would be more likely to accept you?

PurpleDaisies · 18/11/2019 13:19

I take the point of people saying it’s selfish etc. But the situation is what it is

Ie you’re know you’re selfish and you’re screwing your sister over but you don’t care. Lovely.

I am not taking any money from her and plan on reinbursing her for her monetary loss in putting her name on it.

How will she get that moved from you? It’s stuck in equity in the house which is useless if she wants to buy. I hope to god your sister changes her mind.

Have you actually spoken to a broker about this plan? Why can’t you buy something smaller/less nice on your own?

Bigbigboots · 18/11/2019 13:28

I don't think you should do it. How are you going to pay all the extra costs she will incur? It is very difficult to get a mortgage when you already have one. She may never be able to buy because she has 'just lent you her name'. She may have to pay rent for the rest of her life, even when in retirement, because she can't get a second mortgage. If you lose your job or can't work she will have to pay your mortgage. If you go bankrupt and the house is repossessed she will have that on her financial record or be stuck paying all your debts. If she wants to buy a house with a partner she may not be able to. The extra stamp duty on second homes can increase the cost of buying by tens of thousands. How are you going to compensate her for that if the bank thinks you can't even afford the mortgage on your house by yourself? What if she loses her job or is in an accident and can't work and can't get housing benefit to help with her rent because she already owns your house. It is different with parents helping children because those parents tend to be older and already have their own houses and lives sorted out. There are probably ways she could help you but this way seems very risky for her. Could she not give you a loan to increase the deposit size or something? Or go halfers on the house but actually pay some money towards it so she was building up equity. Not half the mortgage as you would be the one living there but maybe a quarter and then 50 percent of the house is hers.

Original poster
Tripletsfun · 18/11/2019 13:29

I have enough extra to be able to pay for the costs that she would face in extra stamp duty - but it’s not enough that it means I could still get a mortgage on my own if that makes sense?

You are entitled to your views but the whole point I came on here was to try and be as fair as possible. But thank you very much for all opinions.

OP posts:
GiveHerHellFromUs · 18/11/2019 13:32

@Tripletsfun no it doesn't really make sense, to be honest.

The long and short is your sister will be in a much worse off position than you in the long run and could end up screwing you over if she so wished.
Be really careful OP, for both of your sakes.

Original poster
Tripletsfun · 18/11/2019 13:32

Thanks bigboots. I thought the 10% would be one way of her building up equity?

OP posts:
Original poster
Tripletsfun · 18/11/2019 13:39

I want to be as fair as possible. So far PPs have said:

  1. She will find it hard to get a second mortgage unless she is on a high salary (she is)
  2. She will incur higher costs as a result (I will pay this - that is really not an issue so for the sake of not derailing this, and helping me find a workable Solution, please could you accept this)
  3. The financial risk that I go bankrupt/it is repossessed/she becomes ill. These are all fair points to consider. If worse came to worse, it is big enough that both of us would and could live in it. We would never see the other on the street.

The plan is for her to buy her own place in the next year or so.

OP posts:
Quartz2208 · 18/11/2019 13:40

I dont think you are being selfish but I do think you are (both) being incredibly naive for what the implications are for your sister no longer being a first time buyer and what her wanting her own mortgage would mean for you, your mortgage and hers. Having two mortgages is a no no unless one is a buy to let - how would that work

It is different from parental help because that tends to be money and not going on the mortgage

You need separate and together financial and legal advice so both of you understand the implications of it.

Its one of those things that sounds lovely in theory but in practice is a lot more difficult

PurpleDaisies · 18/11/2019 13:47

I thought the 10% would be one way of her building up equity?

What you are utterly failing to understand is that equity is useless to her unless you sell the house and give it to her.

What actual proper financial advice have you had?

MMadness · 18/11/2019 13:51

Whatever you decide financially. Ensure there is a binding financialagreement between you drawn up correctly.

Original poster
Tripletsfun · 18/11/2019 13:51

The other way I could think of it being fair - is I protect my deposit and we do a 50/50 split on any equity. It does mean that should one of us want to buy the other out then we will have to sell. At the moment she does not want to live in it. But should she then we could both live there or I could move out but it would at least mean I was also on the property ladder.

In that case what would be a fair proportion of the mortgage to pay given that I would currently be living there?

I was hesitant to go down this route as it seems more complicated to me but perhaps not and maybe this is fairer. And we just sell should one of us decide to. That seems no less risky than if I were buying with a friend or a partner. In fact inherently less risky as I trust my sister more than anyone else!

OP posts:
fedup21 · 18/11/2019 13:52

Your sister is on a very high salary and is happy to help you out, but seemingly no interest in getting on the property ladder herself?! How bizarre. So she is happy to rent?

Original poster
Tripletsfun · 18/11/2019 13:55

Yes she is happy to rent. She lives away at the moment and does not want to buy there. She would be happy to buy where I am as I live still in the city we were brought up in and she plans on moving back eventually.

OP posts:
Quartz2208 · 18/11/2019 14:01

are you both single why dont you get a two bed flat and live together then protect your deposit

Innishh · 18/11/2019 14:11

What is the cost of the flat you are buying - what % is mortgage and deposit? And how much of the mortgage do you need your sister to cover (on paper)? What is the shortfall?

How much does your sister earn and what do you think her budget will be when she buys in the next year?

This will help you calculate the financial hit to her. You might work out that adding up her losses of FTB stamp duty, extra 3% stamp duty when she buys a “second home” this year, the extra costs to her mortgage rate for 25 years is too much for you to pay?

I totally understand wanting to buy - but an important part of getting into a commitment is understanding and agreeing how you will get out of it.

Might be easier for you to look at something cheaper in a nearby area - if it’s only 10% additional difference you need - penalties to her / you might be more than that difference - so you would be paying that out twice IYSWIM?

Innishh · 18/11/2019 14:15

She would be happy to buy where I am as I live still in the city we were brought up in and she plans on moving back eventually.

Do it the other way round then - let her choose what she would buy in your area this year and you live in it until she comes back then she buys you out and you skip off with some equity? Or you share for a bit? Then she has a proper investment?

LemonTT · 18/11/2019 14:33

OP, you are also ignoring the lenders perspective on this. By perspective I mean legal interest.

Your sister is not just lending her name to an application.

She is making a joint application for a secured loan. She is borrowing money and then using it to partially buy a property with you. She has to have a legal interest in the property. She will have a legal interest in the property. That interest cannot just be defined by you.

She is the one losing out here, because using that debt to provide a home for you is an opportunity cost to her. She needs to get at least the same return as you.