Rermortgage- is this boxing clever?

B

BONJOURNO

Registered User
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12
Hello,

Question regarding a family member, we're trying to think outside the box to get him on the property ladder.

My brother who is in his early 30s is living with my father in dublin. He works full time but his salary is in the 35000 range, so is priced out of Dublin. My father owns the house outright.

The scenario we're exploring is this:

if my dad legally gifted this family home (worth 340,000) to my brother, then obviously it would be in my brother's name. Could my brother then proceed to remortgage it, and use the funds to buy a slightly cheaper second house that my dad could live in?

That end result would be that my dad gets to downsize and my brother gets a house which the usual loan to income rules would have otherwise prevented him from owning. Am I missing something??

Feedback appreciated!
 
If your brother earns €35k, the maximum mortgage he will get will be about €120k.

How does owning your dad's house change that?

What age is your father? If he is over 65, he could get a life loan on which the interest would be rolled up. I wouldn't advise it as the interest rate would be very high.

Brendan
 
Does the house have a garden? That you could build a "granny flat" for your Dad to live in... would certainly be cheaper than owning two houses

I've seen this done very successfully
 
It was my understanding that central bank restrictions did not apply to a remortgage, so I thought it might put my brother at an advantage
 
If the father does as you say he'll be at the mercy of your brother as regards to where he lives in the future. What would happen dad if your brother got married? When you say, "we're thinking outside the box", does this include your father? Personally, I wouldn't do this if in your fathers position.
 

If brother got married, it shouldn't change the situation as Dad would have the house from the proceeds of the remortgage and brother would have the original house. But you're right, hinges on trust and not a decision to be taken lightly by my Dad, he's the boss.
 
Still leaves your father living in a house which he does not own and which he is dependent on someone else paying the mortgage which would be a BTL mortgage.
I know everyone starts these arrangements in good faith and you all trust your brother but things don't always work out and its your fathers home.
 
Your brother earns about €2400 a month.You say he'd remortgage the house(worth 340 k) and buy the father a slightly cheaper house(say 300k).
So your brother would have a mortgage of 1600 or more?
The idea is bonkers.Your brother simply doesn't earn enough to be even thinking of a mortgage.
 

Haha, well thank you for the forthright feedback. It's difficult, I'm not suggesting that it is the way to proceed, just exploring the feasibility in theory.
 
Might be better to buy the property from the father for 3.5 times his salary, with the rest being a gift, albeit sheltered by threshold.

Then use that cash to make it suitable for them to cohabit…granny flat type stuff.
 
bunny_ said:
Does the house have a garden? That you could build a "granny flat" for your Dad to live in... would certainly be cheaper than owning two houses

I've seen this done very successfully
Click to expand...
To get planning for a granny flat, you usually have to demonstrate a medical need to care for a direct family member.

If the site the house is on is sufficiently large, you can get planning for a completely separate residence, but there are additional costs with that aproach.
 
Why doesn’t your brother but the cheaper second house based on his own salary, live there himself and have your dad and you give him €3K each a year as a gift to help him pay back the mortgage? That way you are both helping him and your dad still has a house to live in.
 
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