3 siblings want to buy a property together as none can afford on his own

All_Night_Long

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Hello all,

I have made contact with a few mortgage brokers but would like some additional points of view if anyone would like to chime in. I would like to buy property with my two siblings, so the mortgage and property is in all 3 names (property held as tenancy in common).

Between us we have 40k of a deposit. One of us is earning 50k per year (and has been employed for 9 years continuously). The other has been employed at 50k per year for 5 years straight but is now going to enter a masters program in Europe. The third has returned from earning 50k per year in USA and is currently unemployed. We are all FTB and aim to purchase a house, renting out 2/3 bedrooms to cover rent. We all have proof of savings, proof of rent paying and zero negative credit incidents.

1. I assume lenders would calculate capacity to pay back solely on the earning power of the sibling currently employed. Yes?
2. Is having two additional non-earners on a mortgage positive/negative/neutral?
3. Is it smarter to have one person on the deeds and all three people on the mortgage so that only one person loses their FTB stamp duty relief eligibility?
4. Is a mortgage of 200k achievable? Why/why not?

Let me say- there will be a joint ownership agreement in place which will set out what will happen to income generated, expenses, exit, mortgage drawdowns, mortgage prepayments etc.

Thanks for any thoughts you share & have a great day!
 

Brendan Burgess

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3. Is it smarter to have one person on the deeds and all three people on the mortgage so that only one person loses their FTB stamp duty relief eligibility?
What is the FTB stamp duty relief? I thought it had been done away with. Stamp Duty is 1%, so it should not be a consideration.

Why would you buy a property with two others? It's very complicated doing it with one other person, never mind two.

If one is leaving the country, then they should not be buying property in Ireland.

How big is the house? How many of you are going to live in it?

Just look at all the problems in this forum from people who bought jointly. That should put you off the idea.

Brendan
 

All_Night_Long

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What is the FTB stamp duty relief? I thought it had been done away with. Stamp Duty is 1%, so it should not be a consideration.
Looks like that exemption has been done away with. Thanks for pointing that out.

Why would you buy a property with two others? It's very complicated doing it with one other person, never mind two.
All three of us are contributing to the deposit so therefore should be represented in a legal sense on the property.

The property has not been found yet- but I am targeting areas in Dublin short distance from major employment centers. Any tenants should be young professionals. The property will be 2 or 3 bedroom.

I have looked at the problems on the forum and many are due to relationships breaking up. I would not like to fall out over money, but I would prefer to go into business with family rather than friends. Unfortunately none of us have a deposit on our own so this is the preferred route.

From what I have seen now is a good time for me to buy into property in Dublin. That is why I am looking into it at this time.

Cheers
 

Bronte

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. I would not like to fall out over money,
That's very funny, it's exactly how you will fall out. Luckily for you no bank will entertain this idea. And it looks like you are the one pushing this as you see a great investment, which if fine, just not with two others. Can you not go alone, are you the one back from the US (have a great day !) with no job yet?

As far as I know banks will not allow anymore one person on deeds and three on mortgage. Would love to know what the brokers have advised you?

From my own sources I hear things are cooling in Dublin. But I also note the building is now stalling, so rents are going to climb higher. Personal opinion of course.

If you get a job would you not be better off buying and managing a property on your own.

The sibling going abroad, why would they want to buy in Ireland.

And what happens when you all move on in live and get married and want to buy a home etc. No agreement will cover everything. Then there's the tax situation and who is going to be the landlord.
 

Monbretia

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Plus if one of you wants to move on and buy on your own, the full liability of this mortgage will be assessed against income, not 1/3, 100% liability which will affect the amount that person wants to borrow to buy their own house. Rent may be taken into account as income but not all of it.
 

All_Night_Long

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Well AIB did not have a problem with three people being on the mortgage document (from my meeting with them last week). For obvious reasons the only income that will be considered (for multiplier and net remaining income reasons) will be the sibling currently in employment.

What would be preferable would be each non-mortgaged sibling to put their deposit forward to pay off the house purchase in cash and the mortgaged sibling to put forward their part of the deposit and the mortgage. That should mean the house will be owned by A and B and C, with a mortgage registered against it in the name of C.
 

mf1

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"That should mean the house will be owned by A and B and C, with a mortgage registered against it in the name of C."

I think you may have misunderstood the position. If there are three names on title they will all have to be on the mortgage. You cannot mortgage one third of a property. A bank could not repossess the property in the event of default.

mf
 

All_Night_Long

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"That should mean the house will be owned by A and B and C, with a mortgage registered against it in the name of C."

I think you may have misunderstood the position. If there are three names on title they will all have to be on the mortgage. You cannot mortgage one third of a property. A bank could not repossess the property in the event of default.

mf
OK thanks- I will look at that again. I would think the holder of a mortgage (bank) could repossess any house the mortgage has been legally registered on- regardless if the mortgagee and house owner differ.

A similar situation would arise where a small company takes out a loan and a director puts his house up as collateral. If the company defaults on the loan then the bank repossesses the house.
 

Brendan Burgess

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The more I think about this, the crazier it is.

The Central Bank lending guidelines allow first time buyers to borrow up to 90% but second time buyers are limited to 80%.

A couple of years down the line, one of you wants to buy a house with your new partner. You will be limited to an 80% mortgage and you will probably have your deposit tied up in a house, over which you are fighting.

Complete madness.

Brendan
 

trasneoir

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326
Tax people - could these three split rental income in a tax-efficient way (where the non-earners take full advantage of their unused credits/srcop), or would they have to split it equally?

OP if you're dead set on this you've got to be really pragmatic and imaginative about working out all the "what-if"s, on paper, in advance. I know you don't anticipate any fallings-out, but look at all the "divorced - fighting over house" threads here - none of them expected it either.
 

TTI

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281
Ow, my heads hurts at the potential mess you are all inviting on yourselves. You will all be liable for the full mortgage individually, and even if you have a comprehensive agreement covering different scenarios it is extremely difficult to enforce without very expensive court action.
 

moneybox

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You all on good salaries of circa €50,000 each yet ye only have €40,000 of a deposit gathered. This scheme is a recipe for disaster and you would all be better off saving individually for a deposit to buy ye own place.
 

Peace1

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Please please do not even consider this. I have never posted before but felt I had to now to stop you getting into the horrible mess we are in. My husband bought with two siblings and now one lives in the house and refuses to move. You think everything is great with your relationships nos but once you or your siblings start having kids/married etc,everyone's needs will change. Trust me,I wouldn't wish it on anyone. My advice,save and get your own place,even if it takes you years to do that. Our lives have been turned upside down by this house,you don't want to go through that. Best of luck.
 

All_Night_Long

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5
Thanks all for your input. I went ahead and bought on my own. My other siblings are also on their way to buying on their own. Looking back I think it would have been awkward since all siblings would not want to live in the same house. If the house could have been bought as an investment for 2 and living space for one then maybe that would have worked, but after afew years people would want to buy on their own and would have to deal with teh baal and chain of a preexisting mortgage.
 
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