Sharing a Mortgage with Family
The bank of mum and dad has long offered first-time buyers with a helping hand when getting on the housing ladder.This doesn’t just have to mean them putting down a deposit on the property, but they can actually share the mortgage or act as a guarantor mortgage for you.
Sharing your first property with your parents may not have always been quite what you imagined when you thought of escaping from the family home, but if they are willing to help you then it could give you the boost you need to get your first property.
It also need not stop at your parents, a more appealing choice might be to share with a brother or a sister or even an aunt or an uncle.If you are going to share a mortgage with anybody then one of the safest routes is to share with a family member, as you will know them well. If it is someone like your parents they have also probably gone through the house buying experience themselves, so you will have the added benefit of having some experience on your side.
What are the Options?
There are two ways that a family member can help you get on the property ladder. The first is for you to take out a joint mortgage, this would involve you both having responsibility for paying the mortgage. It could be that one of you owns a larger percentage of the property or it could be split.If you do decide on this option and it is with a parent then it is probably worth looking at the mortgage share as an investment and something that will not only benefit you but them as well. Hopefully they won’t want to live in the house with you, but you should make sure you both know what limits and ground rules will be imposed before you sign the contract.
If you choose to share with someone like a sister or a brother then it is more likely that you will both live in the property together, which is fine if you both get on. Your parents could buy the property for both of you to live in, but all four or three of you would take out the mortgage together.
Another option is to have your parents or parent act as a guarantor for the mortgage. This means your name will still be on the mortgage, but if you can’t make any of the payments then responsibility will be passed over to them and they will legally have to pay for the mortgage. The lender will take this into account when they consider how much they are willing to lend to you. They will often view it as less risky if they have a guarantee from your parents that they will be able to pay the mortgage. However if your parents already have their own mortgage to pay this might not be a wise choice.
Blood is thicker than water, so sharing a mortgage with a family member is probably one of the safest routes you can take when sharing a mortgage. It is important that both parties know where they stand and who will live in the property and who will not, if you get on with your family then this option is probably worth considering, if you don’t though you may want to think twice.
