Can you buy half a house?

M

mickoneill30

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My folks own a second house that myself and my fiancee are renting from them. They own it outright with no mortgage. I'd like to buy it but its value is about €500,000 which is out of our league. With the way property is increasing it's accelerating further out of our league quicker than we can ever save for it.

Before we moved into it my dad was thinking about selling it and investing the money elsewhere.

My options are to
1: Keep renting indefinitely.
2: Buy somewhere else and let my folks sell their house.
3: Buy a share????

It's the buy a share I'm interested in but I don't know if it's possible and what the legal ramifications were. I could get a mortgage of about €300,000 and buy whatever percentage of the house that would pay for. Then I would rent the remaining percentage from my folks. In 10 or 20 years we could then either purchase the remaining percentage for its worth then or sell the house and give my parents their share.

So if it was worth €500,000 now and I borrowed €300,000 then I'd own 60% of the property. I'd pay my parents 40% of the rent and in the future I would either purchase the extra 40% of what the house was worth in the future or sell up and give them their 40%.

But, is this possible? Are there any lenders that would do it? Would a lender give me a mortgage for 60% of a property. I can see problems for them if I defaulted on the loan and I only owned part of the property.

I realise we'd need legal agreements between me and my folks on what to do with the property after 10 years or what to do if one of us wanted to get out early. That's not the hard part.

Does anybody have any experience in this type of thing or any ideas?
 
No, you can't buy a share of a property. Your parents could gift you the balance of the property if they so wished - do you have any siblings? Do your parents actually want to dispose of the house at the moment?

Sarah

www.rea.ie
 
Sarah W said:
No, you can't buy a share of a property. Your parents could gift you the balance of the property if they so wished - do you have any siblings? Do your parents actually want to dispose of the house at the moment?

Sarah

www.rea.ie
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Bummer. Thanks Sarah. I don't think my folks would gift me €200,000. I'm not that nice. I suppose they could give me the rest with me agreeing to pay them back. That gets messy though. If I did go that route I presume I'd be paying stamp duty on the full price. Is that correct?
As for the siblings I do have 2. But they'd have to buy it as an investment (which they can't afford) or as somewhere to live (we're all far apart). The folks were handy because this is house 2 for them so they can own it and live in house 1.
As for them wishing to sell. They're easy. They'd sell if we moved out. They don't want the hassle of renting to strangers and I can't convince them otherwise (I have tried). While we're living there it's an extra income with no worry for them so they're happy enough.
 
ClubMan said:
Eh? So how, for example, do couples who buy together and then - for one reason or another - one sells their share to the other manage it?
Click to expand...

But in that case doesn't the partner selling part of the house give up all rights on the property so only one partner ends up owning 100%. In the question above, he would own 60% of the house and the parents would own 40% of the house.
 
I have a 1/3 share in a investment property with my parents. They wanted to buy a property that came on the market joining property that they already owned. We all put in a 1/3 deposit and got a mortgage for the rest. I have LA on my own life to full value of mortgage and they have a joint LA policy to the full amount of mortgage. We have our own personal agreement on interm and final outcome which we spoke to solicitor about when purchasing. I pay tax on my 1/3 share and they on their 2/3 share. Mortgage and LA policies get paid out of rental income.

Ask a solicitor - I can't see why not if your parents are agreeable.
 
Sunny said:
But in that case doesn't the partner selling part of the house give up all rights on the property so only one partner ends up owning 100%. In the question above, he would own 60% of the house and the parents would own 40% of the house.
Click to expand...
Not in the case of three people (e.g. friends) buying together and they one of them selling their share to the other two. I know people who have done this so it is possible.
 
ClubMan said:
Eh? So how, for example, do couples who buy together and then - for one reason or another - one sells their share to the other manage it?
Click to expand...

am in the process of being bought out myself.

as far as i know, reason this works is because in both situations you are buying the full property - firstly as part of a twosome/threesome or whatever, and secondly as a twosome/singleton! from banks point of view, at no stage are you buying a half/third, instead you jointly own the property. could be wrong of course!!
 
I suppose it's the mortgage that causes the problem. If I borrow €300,000 and buy 60% of a property the bank isn't going to be able to claim 60% of a house if I default on the loan. Sarah's option about the gift makes more sense then. If I borrow 60% and get a gift of the 40% then the house is in my name and the bank would have no problem taking it if I defaulted.

I don't know how two mates or siblings do it then. I presume they don't get 2 mortgages for one house and both have their names on the one mortgage. That way if one defaults the house can be taken.
 
If your parents want to retain their share of the house they can but they would have to join the mortgage so that you are all equal owners of the house. You can only have one mortgage on one property - if there were two (or more) and only one defaulted the lender would not be able to repossess.

Sarah

www.rea.ie
 
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