I was reading this article in the Irish Times yesterday.
And yes the article is kinda terrible and the idea of buying with 4 others is not the best but there are some interesting tit bits in there about liability and how banks look at lending in this sort of situation. But it also got me wondering.
How would a bank approach a situation where for example I was to buy a property with a friend or relative where I put up 50% (in cash) and they put up 50% but need to rely on a mortgage to fund it. Will a bank lend when there is only half interest in the property as security?
I can tell you this, it will all end in tears.
Don't do it. Buying property with family or friends is a terrible idea.
Sure jesus, even buying as a married couple ends in tears often enough.
The MFV Creadan Lady is a mussel dredger from Dunmore East.
been there done that.
I bought with a family member, we were young and single then we grew up and got married.
getting out of that house was a nightmare as we both wanted different things. avoid at all costs.
Property-wise, there are few worse ideas. For reasons of political correctness, I can't post the worse ones, but each contains some combination of the words rent/traveller/no deposit.
The bank won't accept half an interest in a property as security. They bank will want joint and several liability between all owners of the propertyfor the mortgage. If you have 50% of the price of a property, borrow the other 50% yourself and then do a rent-a room. You will be living under the same conditions and have half the house bought for you.
Thanks, thats kinda what I thought. I have my own house and wont be living there. The idea is to help my sister in law out so that she can get on the property ladder and have somewhere secure to live so she is not relying on renting. I dont want to get into the situation of buying somewhere and renting it to her, I would need her to have a financial interest in it. Simply giving her the money has all sorts of tax implications.
I think it can work for example if family members buy house in home town and divide up months and swap as agreed. Xmas may be time all want so share or make it moveable year on year but any borrowings need be personal, not a mortgage
I know two sets of people who did this 15 years ago. One set were two brothers. The other were two friends.
In both cases it led to a lot of acrimony down the line when one person wanted to get out, due to personal circumstances, and the other did not.