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Joint mortgage advice for first time buyer

Hi, Just wondered if you guys could give a first time buyer some advice. Im in the process of buying a flat with a friend which we hope to sell in a couple of years, making a small profit. To raise the 10% deposit i hope to borrow the money from a relative. Now, as i understand it, we will both own 50% of the house, and when we come to sell up, the 10% deposit will appreciate at the same rate as as the house does, so for example, if the flat increases in value by 30%, The money placed as a deposit will also appreciate by 30%. Is this right? Also, is this question of interest rates. Am i right in thinking that taking into account my relatives deposit, i would technically be paying for a smaller percentage of the overall mortgage and therefore have smaller monthly repayments?

Thanks for any help.

Reply to
jon101.taylor
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Given the questions you've asked here, I'd strongly advise you to go and talk to a solicitor about this now before you commit to anything at all.

In general I would have expected that you would own shares in the house in proportion to the capital you provide - so if you put in 10K plus 45K mortgage and your friend just 45K mortgage then you would own 55% of the house and your friend 45%. You would each pay the mortgage in proportion to the size of your borrowings. (so 10K+40K against 50K would give you

50% of the house but 4/9 of the mortgage repayments)

I suspect that you will both be jointly and severally liable for the mortgage. That means that if your friend can't repay, the bank can chase you for the money. If this goes on for 12 months and then you sell the house, what do you expect to get from the sales proceeds? Your "share"? Or more than your original share because you've been paying all the mortgage for 12 months and your friend has been paying nothing?

So I really think you need to get professional advice. (IANAL and the above could all be completely wrong so if your solicitor tells you something completely different then listen to them, not some random stranger on usenet)

Tim.

Reply to
Tim Woodall

TBH if you have to ask that sort of question you shouldn't be making such an "investment".

Oh dear. What terms have you agreed with the relative? Do you have to pay them interest, or do they get a share in the increased equity? What if the price falls, do they get all their money back? What about buying/selling costs? What if the flat goes down 5% and the buying/selling costs are 8%, the deposit is wiped out, how do you pay off the mortgage? Why do think buying a flat for 2 years is a good idea? You do realise that you're taking a big gamble don't you? Or have you been listening to too many of these pillocks who tell you "can't go wrong with property" etc?

Reply to
Andy Pandy

In message , snipped-for-privacy@gmail.com writes

no it wont. Its called 'gearing'. The equity will increase at a far higher rate.

No completely wrong. e.g. buy for £100k, deposit = £10k. House value goes up to £130k. Equity is now £40k, i.e. House increases 30%, equity increases by a factor of 4.

No.

Reply to
John Boyle

Try reading

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(This is Money's brief guide to buying with friends; if the link doesn't work google for it). I would also strongly recommend having a read round the rest of the This is Money site, or any other similar site of your choice - it sounds as though some additional background information would be helpful to you. Mouse.

Reply to
Mouse

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