Is this offer too good to be true????
Discussion
I’m looking for a little advice here with taking over a house from my brother-in-law.
He has a number of houses he rents out and is looking to sell off all of them to pay off his mortgage. He has sold all but one which is struggling to sell due to location/ price.
The house in question is a 5 bed detached with 2 acres in North Essex. It’s worth circa £750K on the open market and was looking to sell via a ‘we buy any house’ company for a price circa £100k below this. The offer they made him meant he would walk away with £60k which he was happy to do just to get rid of it.
Here comes the offer he made me at the weekend.
If I were to sell my house I’d earn circa £70k cash, I’d give him the £60k cash and then move into the £750k house continue to pay his mortgage repayments each month. We have agreed that when we come to sell the house, all the profits would come to me and my wife. The mortgage is only interest only at the moment but in a few years we would revert to a repayment.
I’m lucky to be in this position and have the chance to live in what I’d deem the house of my dreams. I fully appreciate there are risks here but am I missing something oblivious??
Also I appreciate some sort of contract would need to drawn up between myself and my brother-in-law to define the T&C’s.
He has a number of houses he rents out and is looking to sell off all of them to pay off his mortgage. He has sold all but one which is struggling to sell due to location/ price.
The house in question is a 5 bed detached with 2 acres in North Essex. It’s worth circa £750K on the open market and was looking to sell via a ‘we buy any house’ company for a price circa £100k below this. The offer they made him meant he would walk away with £60k which he was happy to do just to get rid of it.
Here comes the offer he made me at the weekend.
If I were to sell my house I’d earn circa £70k cash, I’d give him the £60k cash and then move into the £750k house continue to pay his mortgage repayments each month. We have agreed that when we come to sell the house, all the profits would come to me and my wife. The mortgage is only interest only at the moment but in a few years we would revert to a repayment.
I’m lucky to be in this position and have the chance to live in what I’d deem the house of my dreams. I fully appreciate there are risks here but am I missing something oblivious??
Also I appreciate some sort of contract would need to drawn up between myself and my brother-in-law to define the T&C’s.
All of what profits?
How big is the current mortgage, and how would you switch to a repayment mortgage?
And above all, how much do you like your sister (and depending how it pans out the rest o your family...)? Because it's not just money you're gambling.
ETA presumably he owes £600k on it, so how would you remortgage if there's only 10-15% equity?
And... If it isn't selling at £750, it isn't worth £750.
How big is the current mortgage, and how would you switch to a repayment mortgage?
And above all, how much do you like your sister (and depending how it pans out the rest o your family...)? Because it's not just money you're gambling.
ETA presumably he owes £600k on it, so how would you remortgage if there's only 10-15% equity?
And... If it isn't selling at £750, it isn't worth £750.
Edited by Bill on Monday 24th August 12:11
marshalla said:
If you can cover his mortgage payments - why couldn't you get your own mortgage and eliminate the problems associated with transfer & ownership from day 1 ?
I guess for starters there would be 30 grand of stamp duty.So living in a house that you have only paid 8% towards and still owned by someone else sounds iffy to me. How long is the mortgage offer for and what happens if interest rates rise.
marshalla said:
He'll probably have to pay that at some point anyway, unless this whole thing is a scheme to avoid it by hoping that nobody notices he's been paying for it in instalments.
He says that when we (not sure it is a we )come to sell the house he will receive all of the profit. My understanding is he will never legally be buying the house therefor not paying stamp duty.I don't like it
If you want to buy the house from him now, buy the house from him now
the potential for something to go wrong in the scenario you describe is large: him owning, you paying him a chunk of money, you paying a mortgage in his name, profits arising going to someone other than the owner
the chance of falling out with your brother over it in the future is high imo
If you want to buy the house from him now, buy the house from him now
the potential for something to go wrong in the scenario you describe is large: him owning, you paying him a chunk of money, you paying a mortgage in his name, profits arising going to someone other than the owner
the chance of falling out with your brother over it in the future is high imo
deanogtv said:
If I were to sell my house I’d earn circa £70k cash, I’d give him the £60k cash and then move into the £750k house continue to pay his mortgage repayments each month. We have agreed that when we come to sell the house, all the profits would come to me and my wife.
What about losses?So my take on it is... Your considering giving someone the hard earned equity you have built up in your home as a bond payment on a home that your paying a hefty monthly rent on!! Are you Mad? Brother-in-law or not, walk away!!
If you can afford the mortgage repayments then buy the property from him. I certainly wouldn't be putting my hard earned Wonga into a home without my name on the deeds and that could get repossessed or sold from under my feet at any point.
If you can afford the mortgage repayments then buy the property from him. I certainly wouldn't be putting my hard earned Wonga into a home without my name on the deeds and that could get repossessed or sold from under my feet at any point.
Mallinson1984 said:
So my take on it is... Your considering giving someone the hard earned equity you have built up in your home as a bond payment on a home that your paying a hefty monthly rent on!! Are you Mad? Brother-in-law or not, walk away!!
If you can afford the mortgage repayments then buy the property from him. I certainly wouldn't be putting my hard earned Wonga into a home without my name on the deeds and that could get repossessed or sold from under my feet at any point.
Very much this. Don't take the considerable risk.If you can afford the mortgage repayments then buy the property from him. I certainly wouldn't be putting my hard earned Wonga into a home without my name on the deeds and that could get repossessed or sold from under my feet at any point.
Mallinson1984 said:
So my take on it is... Your considering giving someone the hard earned equity you have built up in your home as a bond payment on a home that your paying a hefty monthly rent on!! Are you Mad? Brother-in-law or not, walk away!!
If you can afford the mortgage repayments then buy the property from him. I certainly wouldn't be putting my hard earned Wonga into a home without my name on the deeds and that could get repossessed or sold from under my feet at any point.
Thirded. You would have to be mental to take him up on this offer.If you can afford the mortgage repayments then buy the property from him. I certainly wouldn't be putting my hard earned Wonga into a home without my name on the deeds and that could get repossessed or sold from under my feet at any point.
Op,
If anything went wrong anywhere, you'd be up s
t creek. You won't have 60 k equity in the house, because it's his / the banks. You can't change that, because it would be a sale and mortgage co would ned to know as an interested oarty (ianal)
Say he dies. You just lost your 70k.
They split up, same.
You want to mov?e You have no equity for a new house.
Interest rates going up? Can he cover / you cover?
Also, worryer is "in a few years rever to repayment" - i you can't afford it now, how sure are you that you can afford it in 3 years time with higher interest?
If anything went wrong anywhere, you'd be up s
t creek. You won't have 60 k equity in the house, because it's his / the banks. You can't change that, because it would be a sale and mortgage co would ned to know as an interested oarty (ianal)Say he dies. You just lost your 70k.
They split up, same.
You want to mov?e You have no equity for a new house.
Interest rates going up? Can he cover / you cover?
Also, worryer is "in a few years rever to repayment" - i you can't afford it now, how sure are you that you can afford it in 3 years time with higher interest?
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