Is there such a thing as a 3 Way mortgage

In message , Alan van Wyk writes

No, it doesn't follow that paying half means you own half.

Or that this follows.

Mortgagees will want you each to have joint & several liability which means you will each owe the mortgagee the whole amount. You can divide ownership by being tenants in common, but you cant divide the debt in the way you describe for a normal house purchase loan. A proper bank (not one of the pretend ones) have a mechanism which would suit what you want but they would want a far higher rate of interest and would need some persuading.

Typically, a mortgagee would look at each income and agree an overall multiple, i.e. 3.5 times the larger plus each of the two smaller salaries. (Say)

This is a recipe for a very very big fight between you in years to come. I assume you are all merely friends and are not a 'family' or a menage a trois, and borrowing jointly in these circs will almost certainly cause a problem when one wants to leave/sell, there are major repairs or one party doesnt cough up their share of the mortgage or finds a partner who moves in etc.,.

It WILL end in tears so dont do it.

There is a mortgage to do this. I saw it on the tv news recently. Can't remember which company, but I think it's one of the provincial building societies. A broker should know which one. It's specifically designed to help people buy togther and get on the ladder, so it may have different terms from normal joint mortgages.

Just did a google search, it's the Coventry Building Society

John

sometimes one can look ahead and use hindsight looking back. be very careful with this, fraught with problems, and a potential nightmare. consider death, falling out, unemployment, bankruptcy, marriage, mental illness, a herd of elephants, well maybe forget the elephants, but oh no, there are other ways. Life is not a cosy sitcom.

But it can do, if they so agree amongst themselves, especially if they take pains to make sure they inject initial equity in the same proportion as they make mortgage payments and if they also contribute in the same proportion to maintenance and insurance.

That's a confusing way of putting it and means they could potentially jointly owe three times the amount borrowed, which is rubbish.

What it really means is that they all owe the whole amount together, so that if one of them suddenly can't or won't pay their "share", the others, like it or not, will have to cough up his part.

Provided they can satisfy the lender that they can service the loan jointly, there is no reason they cannot agree to split the debt and equity between them in any way they choose. In the event of a repossession, they would still jointly and severally owe any shortfall from a forced sale, and if there's a surplus, the lender won't be interested in how they divvy it up, they'd just throw it to them and let them fight over it.

A warning to be taken seriously, but it might well not turn out as badly as all that. After all, most mortgages are joint between spouses or cohabitees, and a fair few of those break up too, so a

It could work out perfectly well, for instance, if it's designed as a short-term arrangement with pre-planned procedures for what to do when one of them wants out (e.g. who's responsible for finding their replacement, etc). Something like a situation where they would normally just rent together (perhaps for the duration of a college course) but reckon buying would work out cheaper or avoid the need to move into a HMO-modified (an hence user-unfriendly) house.

A possibly better approach may be to go for a deal where only one (the highest earner) becomes the sole owner and sole mortgagor, but with it being understood by the lender that the borrower may take two paying lodgers, with the propspective rent they are expected to pay counting towards the first's income for loan limit purposes, though perhaps not with the same multiplier. Although he would be sole paper owner and the others just lodgers, they *could* still have a private agreement that the "lodgers" would acquire shares in the beneficial ownership according to some agreed formula. But even this would not necessarily be a good idea, for all the what-if reasons already mentioned.

"Ronald Raygun" wrote

I suspect that a multiple of *rent* from the other two, will be substantially lower than a multiple of the *salaries* of the other two ...

I dare say you're right. Chances are the multipliers would be 1 in both cases, and as the other two would be paying less than their salary in rent...

But it could be that special deals are available based on affordability, where the rent, or perhaps 2/3 of it to allow for voids, is taken into account by directly subtracting it from the projected monthly payments, leaving only the rest to be funded by the borrower's income, allowing him an enhanced multiple for his basic salary.

I guess it'd become more like a hybrid BTL loan. Half the loan would be BTL-like, supported by the expected rent takings exceeding maybe

In message , Ronald Raygun writes

But thee OP didnt say that, he just deduced it the amount of the mortgage contribution

Oh yeas? Youve sued on that basis have you?

In default each will be sued for the whole mortgage amount and each is liable to pay up the whole amount. The amount so paid is held by the lender in a 'security realised ' account and any surplus is then redistributed. If any party fails to pay then each will be sued for the full amount. In court an agreed amount will paid by each. Thats the point of 'Joint & Several' with the emphasis on the "&".

Any split of the debt would be a private matter between them and wouldnt interest the lender at all.

In message , John Bishop writes

Have you got a link to that product, or something that describes it? I cant find it on the Coventry site.

John, are you saying that each person has to *pay* the full amount, not just be liable for the full amount? Surely, if one person does pay the full amount, then the lender's right of action ends, as there is no longer any debt. The payer has a right of contribution from his co-mortgagors.

In message , Doug Ramage writes

On re-reading I see I have confused the procedure for calling in multiple guarantors with the procedure for chasing joint and several primary debtors. Each debtor will be sued for the full amount but the amount received form others will enable the creditor to accept lower amounts from the others.

Sorry.

I am glad that my failing brain is still able to keep up. :)

I did a Google for "house sharing mortgages" and found an article about it. Didn't try the company website.

John

In message , John Bishop writes

Thanks. I think you will find that it was merely relating to obtaining a mortgage loan with a friend and also says that most lenders will do this. It doesn't have the features mentioned by the OP i.e. the loan being divided into separate bits.

You forgot the most likely one: a divorce :)

There is an additional matter where guarantors are involved, in that if (given multiple guarantors) one of the guarantors is forced to pay off the loan, he now acquires the right to pursue the other to recover the money.

Not a lot of people know about this.

That's why, in the typical business situation where there is one "rich" person setting up a business with say two other "less rich" people, if the rich one says "don't worry about signing this guarantee; if the bank wants its money back they will go after ME anyway", the others need to be a lot more careful.

I wouldn't touch the original proposal with a bargepole. If the housing market went up a factor of five in the next few years, it probably would be just fine, but it won't.

Where did the OP specify that the loan should be divided in this way?

I understood him simply to mean that they would share the joint payment in proportions determined amongst themselves, not that they would give three separate mortgages for the same property.

In message , John-Smith writes

Yes. Its called 'subrogation'.

"I am looking to get a mortgage, which will be split between 3 people!" note the word 'split' not shared.

note the phrase 'a mortgage' and not 'some mortgages' ..I think most people wouldnt discern a difference between split or shared in the context you mention.