Buying Family Member out of Shared Mortage

[eimaj]

Hi there

I wonder can anyone give me advice please? I have a shared mortgage with a family member - we both live in the house. I want to move in with my partner at some point and am trying to look into the different options that we have. My partner is self employed, doing ok for himself at the moment, but that can change at any moment of course. I'm permanent in the public sector. Myself and my brother currently have a tracker mortgage, and our house is in negative equity - bought for 382K in 2005, valued at approx 300K now. Myself and my partner would like to buy a house if possible, or to buy my brother out of the house. How exactly would that work? We obviously don't want to lose the tracker, but that would probably entail us both staying on the deeds, and me possibly renting out my half of the house if I move out (and vice versa).

Another possibility would be my partner getting a mortgage on his own, and I'd "rent" off him - basically pay my half of the mortgage. However, as he is self employed, there's is a good chance he will be refused a mortgage, or only be entitled to a small one. Is there any way that I could take out a second mortgage to buy with my partner? Or are banks giving out mortgages at all?

Any advice would be appreciated - I hope I've been clear in my post!

Thanks in advance
eimaj

 

[Brendan Burgess]

The key thing here is that you and your partner want to live together and you don't want to live with your brother.

What does your brother want to do?

Did you do up an agreement when you bought the house together, covering what happens if one of you wants out?

You all want to keep the tracker mortgage.

I don't think that it will be possible for you to buy out your brother's share of the house and keep the tracker. I think that the lender would try to get you off the tracker.

Assuming that is not possible, then they certainly would not allow your partner to buy your brother out.

Option 1.
Your brother moves out and rents his share of the house to the two of you.

Option 2.
You move out and rent your share of the house to your brother

Check the mortgage agreement. What happens if you rent out the house? National Irish Bank says you lose the tracker. Other lenders are silent on it.

I don't think you and your partner should be buying another house together. You already have a house in negative equity, so you should not be taking on any further risk.

Does your partner have cash? I just wonder if you put a proposal to the bank to knock €80k off the mortgage, would they allow your partner to buy out your brother and keep the tracker. Again, I think it's unlikely, but it might be worth trying.

 

[eimaj]

First of all, thank you so much for replying, I really appreciate the advice/comments.

What does your brother want to do?

We haven't totally discussed this yet, as partner and I are just looking into ideas at the moment, but as far as I know, he wants to stay in the house. He isn't in a relationship and has no intention at present of moving on.

Did you do up an agreement when you bought the house together, covering what happens if one of you wants out?

No, not a formal agreement, we just said that the most probable outcome would be for one to buy the other out. At that time, the economy was fine, and we just presumed buying each other out would work. Maybe a tad bit naive, but there's no way back now!

You all want to keep the tracker mortgage.

I think it would be favourable to whoever is left in the house to have the tracker definately, and it would be unfair of the person leaving to change this situation.

I don't think that it will be possible for you to buy out your brother's share of the house and keep the tracker. I think that the lender would try to get you off the tracker.

Yes, you're probably right. I know that there are protection measures being put/already put in place so that lenders can't entice you out of the mortgage, but this would be a change in contract, so it wouldn't fall under any protection like that, would it?

Assuming that is not possible, then they certainly would not allow your partner to buy your brother out.

Option 1.
Your brother moves out and rents his share of the house to the two of you.

Option 2.
You move out and rent your share of the house to your brother

Yes, these seem like the most likely situations, but if I move out (plus my son), we have to find a place to live and my partner may not be able to get a mortgage, or a substantial enough mortgage for our requirements.

Check the mortgage agreement. What happens if you rent out the house? National Irish Bank says you lose the tracker. Other lenders are silent on it.

Do you mean rent it out fully - that we both move out? Or rent half? I will have a look at the mortgage alright. We're with Ulster Bank.

I don't think you and your partner should be buying another house together. You already have a house in negative equity, so you should not be taking on any further risk.

Yes, you're probably right, it's just awful, as we want to move on in life as a couple, but yet are hampered by this economic crisis. I realise that there are so many people worse off than me though!

Does your partner have cash? I just wonder if you put a proposal to the bank to knock €80k off the mortgage, would they allow your partner to buy out your brother and keep the tracker. Again, I think it's unlikely, but it might be worth trying.

He wouldn't have a lot, but this option may be worth looking into.

Thank you again for your reply, I appreciate you taking the time.