Taking out a 2nd Mortgage

F

firsttimebuy

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I bought a house with a member of my family last year, both our names are on the deeds and the mortgage. I am not paying towards the mortgage, a room is rented out with covers half the mortgage and my sister pays the remainder as she lives there.

I am renting at the moment and now want to buy an apartment where I work. I am wondering if this is possible? How would the banks look at the fact I have a mortgage in my name already? I would like to keep the house as an investment property.

Any advice welcome.
 
I presume when you say your sister "can't buy you out" that you paid into the deposit or something before you took out the mortgage?
 
My sister does not have a permanent job, she works full time on a contract basis and would not be able to take over the mortgage.
 
I'm struggling to see where your sister needs to buy you out though. You seem to have made no financial contribution to the property? Or did you used to live there and no longer do?

You are more like a guarantor than an investor unless you've actually invested something.
 
Ah right. Then you have unfortunately have lost FTB status but you knew that bit anyway I presume. It's almost a pity it's yous sis in the house ad not someone paying rent as the bank would view it as a pure investment and if it was comfortably washing its face it may have been in your favour.

I think this is one of those instances where each bank will look at things in a different light and you'll just have to approach them to see where you stand.

Is there any way you'd get your tenant to move outand you move in and then the two of you go for another joint mortgage on a true investment property? Does your sis not earn enough?

Or are you just craving your own space now?!

(best of luck in whatever happens. The banks are getting tighter with the cash these days but you might be lucky. Having said that-have you thought about worst case scenario-sister out of work and tenant leaves: can you afford 2 mortgages?)
 
murphaph said:
Ah right. Then you have unfortunately have lost FTB status but you knew that bit anyway I presume.
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For stamp duty purposes. Not for owner occupier mortgage interest tax relief purposes as far as I know?
 
Thanks for the replies. I'm not really sure why it would be better in the banks eyes to have the whole house let out rather than have my sister in paying her half of the mortgage and tennets paying my half in effect? I'm not sure what the difference is.

Just in case I didn't make it clear the house is not where I work, the reason I want to buy is beacuse I am renting at the moment its not possible to move into the house as it is over 100 miles away.
 
Ah ok, I missed that.

The lack of replies indicates that nobody really knows for sure how a bank will view your application so your best bet is just to approach all the lending institutions you can and see what happens.

They can only say no ;-) Good luck.
 
Depending on several other factors, including your income, amount you need to borrow, etc. some banks would be able to view your sister's property as just that.

I would advise going through an independent broker. They would be in a much better position to advise you on your options than an individual bank would.

Good Luck

Bob
 
Banks do not like when you rent to family members and they then do not give you that benefit of the rent coming in as part of your income. Banks will also take into consideration your own income, any loans you are presently paying, amount you need, property value etc. before approving your new mortgage. Find yourself an independent broker that can advise you which banks will look at your application favorably.
 
euromortgage said:
Banks do not like when you rent to family members and they then do not give you that benefit of the rent coming in as part of your income.
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Just to clarify I am not renting to my sister she owns half the house so she is paying half the mortgage. The remainder of the mortgage is being covered by rent from tennents through the rent a room scheme.
 
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