Looking for Advice Regarding Mortgage

nemesis1000

Hi. I would appreciate people's views. The story is that I saw I house I liked and would like to purchase it. However I am on probation currently in my job. That is due to end at the end of January. The banks are unlikely to give me a mortgage now. Therefore, my sister offered to buy the house with her cash and my cash (I have 25% of the cost of the house in cash myself), with a view to me getting a mortgage on it next year(for which I am pretty certain I will be able to get. And definitely for the amount I need) and paying her back with that amount.
Do you think any bank will give me that mortgage under that arrangement when the time comes(working off the presumption the value of the house stays reasonably stable?). At that stage the house would be bought in my name alone.
Thanks!

The_Morrigan

I'd wait till Feb to ensure you are actually taken off your probation period, employers can extend it in some circumstances.
You won't know if you will be approved for a mortgage until the bank tells you so, it would be very risky of your sister to stump up 75% of the purchase price on the off chance that you might get a mortgage in 6 months time.

nemesis1000

Thanks for the reply. I am 99.9 percent sure I will be taken off probation. And I think that should be apparent to the bank. Do you think it would be possible if you imagine I will definitely be granted a mortgage?

The_Morrigan

nemesis1000 wrote: »

Thanks for the reply. I am 99.9 percent sure I will be taken off probation. And I think that should be apparent to the bank. Do you think it would be possible if you imagine I will definitely be granted a mortgage?

Have no idea - the only person who can answer that for sure is a mortgage broker or a lender once they review your situation. They will be the only person privy to your financial details (purchase price, mortgage amount, income, outgoings etc)

tinkerbell

No, OP - you never know, something might happen over the next 4 months which may mean you don't get made permanent. And even if you do, the bank may suddenly decide not to give you a mortgage. Wait til you get made permanent.

nemesis1000

Ok thanks for the advice. I really do think I would get a mortgage in a year though, and what I would be borrowing is a good bit less than the amount usually given with my salary but I see where you are coming from.

The_Morrigan

OP buying a house and a mortgage is a massive undertaking. If you require a mortgage to buy then ensure you can get one before you go buying a house - it really isn't rocket science.
Also, as far as I recall from some of my law lectures, there are tax implications for gifts over a certain amount from siblings too, it's not just parents.

It would be in your best interests to get proper legal and financial advice along with your sister.


Edit: my recollection served me well!

http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_acquisitions_tax.html

the world wonders

nemesis1000 wrote: »

Therefore, my sister offered to buy the house with her cash and my cash (I have 25% of the cost of the house in cash myself), with a view to me getting a mortgage on it next year(for which I am pretty certain I will be able to get. And definitely for the amount I need) and paying her back with that amount.

There are any number of things that could go wrong with this scheme. Just wait 4 months and get an ordinary mortgage.

The_Conductor

I'd echo what the others are saying here.
There are always unforeseen events that can come out of the woodwork to nuke even the most concrete of plans.
Well done on saving your 25%- use the opportunity of another few months to further save some more.

Its good of your sister to offer to help, as she has done- but really, you do not want to put her in this situation- its deeply unfair on her (not to mention to legal mess you'd create- and issues with property tax etc). Getting it transferred back into your name down the road- would effectively be a sale- incurring legal fees, stamp duty etc. Possibly only a few grand- but a cost nonetheless.

Sit out the couple of months- get your position made permanent- and then consider your options.

Bigcheeze

You could try asking your employer if they'll consider shortening your probation period. It's usually pretty obvious if someone is going to work out after a month or two.

nemesis1000

Ok thanks for the advice. From what you say its not a good option. Its a pity as this house is ideal. But can't get too attached, there will be others in sure. I appreciate the replies.

Mrs OBumble

How badly does your sister need the cash back?

You could always cut the banks right out of the deal, and get a long-term loan from her, which you pay back over 25 years with interest at market rates so it's not a gift.

I guess it's all about how much risk she's prepared to take, and how long for.

The_Conductor

Mrs OBumble wrote: »

How badly does your sister need the cash back?

You could always cut the banks right out of the deal, and get a long-term loan from her, which you pay back over 25 years with interest at market rates so it's not a gift.

I guess it's all about how much risk she's prepared to take, and how long for.

As they are in a position to do it as a cash purchase between them- providing they had a solicitor do up an agreement with a repayment schedule- and perhaps an agreement to pay rent on the property until such time as the cash is repaid to the sister- it might be a runner.

I'd seriously advise doing all of this officially- with a solicitor drawing up the agreement- and everyone keeping exactly to it- as regardless of how close you are to your sister- you don't want anyone to feel hard-done-by with a transaction like this.

If she is willing to do this- and you are willing to pay rent on the property even though its in your name- until such time as you have repaid her in full (with interest)- she could deal with this as an investment- and you with her, as your defacto landlord.......?