Complicated mortgage situation. Opinions?

carlmango11

Hi guys,

Just wondering if anyone more experienced has any thoughts on this situation.

So my sister has wanted to buy a house for years but can't because her name is on a Celtic Tiger mortgage she went halfsies on with our dad. The bank won't let her come off it because it's too more risky for them etc.

She's now looking to buy a house that seems quite affordable in Santry that's listed at €215,000. It needs maybe €10,000 investment. She contacted the bank about a joint application between her and her boyfriend and they set down the condition that if she raised the rent on the apartment by 30% they'd give her what she needs. She managed to get the rent up but when she went to apply they changed their mind.

Now she's devastated as this seemed to be her final hope after, literally, years of trying to find somewhere. Anyway, now she's approached me asking me to go in on the application just so they can borrow enough. I would have to pay nothing towards it. In exchange she would give me €2,400 worth of BOI shares and even a legally binding agreement that if I ever needed her to sell in order to apply for my own mortgage, she would.

The plan is that in a few years time things will have improved and they'd be able to get the extra finance to buy me out. There is a salary increase on the way for her boyfriend and possibly for her. She and my dad are also going to start paying the capital off their apartment very soon so apparently that will improve things (?).

I want to help her but I need to know what I'm getting into. What are the negatives of having a mortgage in my name? Is it likely that a house like that could drop into negative equity (preventing a sale should I want to buy somewhere myself)? Any glaring red flags that more experienced folk can spot?

Any advice would be greatly appreciated as this seems like a big decision.

Tl;dr: any negative of going on a mortgage with no repayments just to help out a family member?

Thanks

HeidiHeidi

On the face of it, and going purely on instinct, I'd run a mile.

I know you want to help your sister out, but you're two very separate people who would be tied together for a very long time by a large debt.

The one thing that leaps out at me is the agreement that she would sell whenever YOU want - I cannot for the life of me see how that would a) be enforceable and b) be practical. What if she and BF have a kid(s) - will you really force her to sell up if it becomes desirable/necessary for you to take out a mortgage? Would you really do that if push came to shove?

There's a whole lot more to this than just signing on a dotted line and not paying any money - what if their circumstances go south in the near future and they can't manage the repayments? You'll be pursued for any arrears as well.

She made one bad decision already and is stuck with the consequences, does she really want to fiddle her way into another?

Is it really imperative that she buys right now? Would she not wait until they've repaid some capital (does this mean she's on interest only at the moment?) on the apartment and get shut of that before taking on more debt?

I'm no expert, but this all just screams bad news at me.

Don't do it.

euroboom13

Tell her to rent.
Problem for you.
1) If she doesn't buy and property falls a small % ,she might be in without needing you.(good result)
2)if she doesn't buy and misses out on finding home till finance improves(ok result)
3)she buys property goes up a bit, but she can't sell to return money, and your priced out yourself.(bad)
4)she buys property and price falls ,she will recent your impute and be reluctant to return money, that she got no value out of.(bad)

So not looking good for you if you give in.

My personal opinion is with new guide lines, she probable wont get a mortgage and neither will a lot of borderline borrowers, which will make case 1)/ the most likely.

Good Luck

tenifan

carlmango11 wrote: »

Tl;dr: any negative of going on a mortgage with no repayments just to help out a family member?

Yea, I heard about this girl whose name is on a mortgage but now the bank won't let her come off it because it's too more risky for them etc.

SBarrett

Your sister probably bought the apartment with a short term view and look at the situation she is now in. Who is to say that won't happen to you? Except, she'll be living in your house.

Buying property is a long term play. If you are not willing to stick it out for the term of the mortgage, don't do it.


...also, if your name is on the mortgage, you will be jointly and severally liable. So if they miss out on payments, the bank can come after you for the full whack.


Steven

It isn't just a matter of you and her, it's you, your sister, her boyfriend and your dad, your own partner?, potential children on both sides etc. Everyone will have a legitimate interest. I'd stay out of it. Other than helping your sister I don't see any benefit for you in this - but a whole lot of problems.

Can the boyfriend get a mortgage on his own?
What happens when you want to get a mortgage of your own and the boyfriend says no?

Trish56

Is the mortgage with her Dad on a tracker rate and is it in negative equity? I presume she has tried all lenders through a broker not just the lender where she initially got the mortgage.

I would definitely recommend like other posters that you stay out of this as it would have huge implications for you in the future if you want to take out a mortgage in your own name or if they went in arrears. Perhaps check if her boyfriend qualifies for a mortgage on his own or if existing mortgage is on tracker rates it may be possible for both to qualify depending on earnings, savings, rental income and mortgage outstanding on the apartment.

carlmango11

Trish56 wrote: »

Is the mortgage with her Dad on a tracker rate and is it in negative equity? I presume she has tried all lenders through a broker not just the lender where she initially got the mortgage.

From what I gather she's tried everywhere and everything. She's been trying for at least 5 years!

Anyway thanks for the advice guys. Nice to get outside opinions.