Mortgage on house with right to residency

FledNanders

Any mortgage experts might hopefully be able to help with this query.

My father is planning to transfer ownership of his house to my brother and me, while retaining a right to residency for himself for the remainder of his life.

My brother currently lives in the house, and my father lives in a granny/grandad flat attached to the house.

It is planned that once the transfer is done, my brother will take out a mortgage to buy out my portion of the house so he will then have 100% ownership, and my father retains his right to residency.

My question is, are banks usually ok with lending a mortgage on a house where there is a right to residence attached to the house like this scenario?

mickdw

I doubt it would be possible to mortgage.

Could brother borrow against anything else to pay you?

FledNanders

No he doesn't own any other property so wouldn't be able to borrow to that level without a mortgage

km991148

You probably already have - but should check with an accountant too.

phormium

Not impossible but banks don't like anything not clear cut. I'd try a broker if I was your brother as they can do the legwork and see if any banks willing to do it.

What the bank will need is for your father to waive his right of residence in favour of the bank should the need arise, in other words the bank wants to know that if they have to reposess they have a clear run at it not hindered by a 'right of residence'. Now how quick a judge would be to order repossession with a parent in the house is another story which is why the banks don't like complications like this. But that said it's worth trying.

FledNanders

https://www.boards.ie/discussion/comment/118828111#Comment_118828111

thanks

coylemj

Phormium said: What the bank will need is for your father to waive his right of residence in favour of the bank should the need arise....

That would render the the father's right of residence meaningless. The father wants security for the rest of his life but if he did what you're suggesting and the son defaulted on the mortgage, he would lose that security. I agree that getting him evicted by a legal process woud probably be difficult but that's beside the point.

I'm sure the OP is genuine about what he's proposing but a prospective lender will see default written all over it. Son stops paying the mortgage and the lender can't foreclose because he's got an elderly father living in the granny flat with a legal right of residence. They will run a mile.

phormium

It's not really rendering it meaningless, just in the case of bank repossession, now in fairness how many people in this situation go into it with the intention to default?

This was not an uncommon situation in lending in years gone by, there was manys the house passed on to younger generation but a mortgage needed to renovate or whatever and all done with right of residence in place. I never saw a strategic default happen.

Now maybe with changes banks no longer are willing but they seem to be getting back into lots of things they stopped after the tiger died!