Way for three friends to put a foot on the prop­erty lad­der

Yorkshire Post - Property - - PROPERTY - Franz Muelthaler

Q Given the way in which mort­gage lend­ing and de­posit re­quire­ments have fluc­tu­ated so dra­mat­i­cally over the last three years, I am strug­gling to af­ford to buy a home on my own. Two friends are in a sim­i­lar po­si­tion, so we won­dered if we could pool our re­sources and buy a prop­erty in more than two names?

A There are two sep­a­rate is­sues to con­sider here. In the first in­stance, the le­gal po­si­tion is that sev­eral own­ers can be named on the ti­tle to a prop­erty, but your so­lic­i­tor should ad­vise you that the house must be held on a ten­ancy in com­mon.

What this means is that, if one of you were to die while own­ing the house, their share would pass ac­cord­ing to his or her es­tate ( ie, un­der the terms of a will or in­tes­tacy rules), rather than be­ing di­vided au­to­mat­i­cally be­tween the sur­vivors.

This point is very im­por­tant, as I’m sure that the last thing you want is for next of kin to be de­prived of a po­ten­tial in­her­i­tance.

Se­condly, with re­gard to the fi­nan­cial as­pect of the trans­ac­tion, len­ders can ac­cept mort­gages in more than one name. Gen­er­ally, how­ever, the in­come mul­ti­ples that they use to cal­cu­late max­i­mum bor­row­ing will be based on two in­comes only.

Some len­ders are pre­pared to take three in­comes into ac­count, so it would be wise to shop around or re­cruit the ser­vices of an in­de­pen­dent mort­gage bro­ker.

Q Will any­one take guar­an­teed DSS ben­e­fit into ac­count when ap­ply­ing for a mort­gage?

A The sim­ple an­swer is that it de­pends on the lender. Some len­ders will take cer­tain types of ben­e­fit into ac­count, al­though you should be aware that child ben­e­fit is gen­er­ally not.

Q I’m look­ing at buy­ing a prop­erty abroad, but don’t know where to start in or­der to raise the fi­nance.

A Many for­eign prop­erty es­tate agents have bro­kers that will be able to ad­vise you on the in­tri­ca­cies of each in­di­vid­ual mar­ket, as each lo­ca­tion can dif­fer in terms of de­posit and fi­nan­cial re­quire­ments.

The best ad­vice is to speak to an ex­pe­ri­enced in­de­pen­dent bro­ker who spe­cialises in prop­erty trans­ac­tions in for­eign coun­tries. It is worth not­ing, how­ever, that big­ger de­posits are gen­er­ally re­quired when buy­ing prop­erty abroad, of­ten in the re­gion of 20 to 25 per cent. Also, be aware of how fluc­tu­a­tions in the value of the euro or other cur­ren­cies can af­fect your monthly re­pay­ments.

QI am hop­ing to use the eq­uity that my house has ac­crued to raise some cap­i­tal. How­ever, on in­quir­ing how much was out­stand­ing on my ex­ist­ing mort­gage, I have been told that I have a large re­demp­tion penalty that must be dis­charged. What can I do?

A Un­for­tu­nately, you will not be able to avoid pay­ing the re­demp­tion penalty on your loan. This will have arisen be­cause your ex­ist­ing mort­gage will have been at a favourable rate or a scheme that of­fered a dis­count or fixed re­pay­ment. The penalty is the lender’s way of re­coup­ing some of this back from you if you choose to re­mort­gage ei­ther be­fore the in­cen­tive pe­riod has ended, or within a cer­tain time there­after.

One so­lu­tion is to pay the penalty and con­sol­i­date this into a new mort­gage with an­other lender. This could work out cheaper over the loan term than with your ex­ist­ing lender.

Al­ter­na­tively, if you don’t want to pay the penalty, a fur­ther ad­vance could be ar­ranged with your ex­ist­ing mort­gage provider at the stan­dard vari­able rate. If they can’t of­fer you fi­nance on that ba­sis, then po­ten­tially a se­cured loan could be ar­ranged to cover the bal­ance. It would be wise to seek in­de­pen­dent ad­vice though, to make sure your over­all re­pay­ments are kept in check.

Franz Muelthaler is mort­gage ad­viser at Wake­field and Dews­bury-based prop­erty spe­cial­ists Hol­royd Miller, tel: 01924 465671.

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