What is the fairest way to buy this?

[Tripletsfun]

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?

and will she be on the deeds because if she is a co borrower yes

or will she be guaranteeing

You need some proper financial advice I think

If she's moving back to where you are or wants to buy where you are eventually would getting a 2 bedroom place together be an option? She could rent her room out to help cover, both pay half the mortgage and both get to build up equity. Obviously you'd want proper financial and legal advice on this. 10% of your property even if you could pay it out might not cover her costs. Would it be worth doing for you and could you potentially pay her 20% in a few years under your plan? She'd be taking on financial risk for you plus extra borrowing and stamp duty costs when she buys. If she's taking on financial risk there should be some payoff above you just covering the monetary costs.

Is your income going to significantly change soon? If not then you can't buy her out at a later date as you won't be able to remortgage on your own

Also on paper you will own it 50:50 unless you have a lodgement with HMRC that says otherwise. If your sister doesn't live on it, she will be subject to capital gains tax on the sale on her half

She needs proper legal advice before agreeing to this

Financially, your sister is mad doing this.

When you say couldn't I get a joint mortgage with my sister when she wants one, the answer is obvious, no. Your income won't enable you to have this mortgage on your own now, so how are you going to get a second?

I think it’s a good idea in theory and hope it works but I just bought my first house,partners second this summer. First house valued at £100,000,second house purchased at £169,000 - second house required deposit,solicitor fees and stamp duty ended up at £31,000 - due to the bank “risking” giving us the second mortgage and £6000 stamp duty to keep the first house. We have a joint income of £80k,in permanent jobs (both public sector), no kids,no outstanding loans.

The stamp duty is paid on the second house,not the first - if your sister has no deposit atm is she likely to have a deposit and stamp duty saved within one year?

So, you can afford to " buy her out" or give her extra money to cover expenses when she wants to buy her second home.

So where is this money?? Why isn't it being used as a deposit??

How will to find 10% or whatever share if the value of the "equity" of the home in 1-2 years?

Say the house was bought for £350,000 and the value rises by £15,000 and she wants her 10%

Are you giving her 10% of £365,000 or 10% of £15,000?

If you give her the lower amount, that wouldn't be enough to"cover" her lost FTB on buying a similar property?

How long will you put aside money for her. What if she doesn't buy for 10 years?

This is one of those things that sounds like an easy, great idea when you dream it up - the reality of the situation will only bite when at some point in the future your sister wants to buy and can't because she is committed to this mortgage, at least on paper. And on paper is enough - another lender won't care how you've decided to split it etc etc, and it sounds as if you won't be able to raise another mortgage to buy her out.

Just giving her the capital for a deposit doesn't mean she is going to be able to get a second mortgage - the lender will consider her to be jointly and severally liable for the whole mortgage on your property (meaning that you are both 100% liable for the whole debt - liability is not split 50/50 or 99/1 or whatever you dream up).

If she guarantees the mortgage for you she will be in a much worse situation as at least she would legally own your place and have access to the equity - she wouldn't be able to get out of a guarantee unless you discharged the debt in full or someone else was mad enough to take her place. Again, she would be guaranteeing that she will pay 100% of the mortgage if you default.

You would most likely end up having to sell to give her the equity, and you'd be back to square one. Or you refuse to sell "your" house, your sister realises you've inadvertently screwed her over and hates you.

I’m not sure that you will be able to get a joint mortgage with your sister for a one bed flat, unless it’s a buy to let

Have you actually run this past a lender or broker?

Sounds like a really bad, and quite dodgy, plan.

I don't understand how you can afford to give your sister 10% of the value of the home next year without either remortgaging or sells no the place.
And her stamp duty will be astronomical- almost the cost of an additional deposit.
Where is all this money coming from next year that you don't have now?
Please don't do this to your sister. Even if she is a higher earner, it's not fair to make her pay disproportionately high living costs.
And your point about people getting help from their parents - the parents have often paid their mortgage off, or are at least not first time buyers looking to buy their home in the next few years. And the help they give tends to be money towards a deposit, not putting their name on the deeds.