engaged couple splitting up

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KatieC

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My sister and her fiancee may be splitting up and she needs some advice regarding their house. They bought it in April 05 for €257,000, each paid 50/50 deposit and got a 25 year tracker mortgage of €236,000 from AIB. Both were first time buyersaand pay approx €1300 monthly. Can my other sister who would be a first time buyer buy him out and take over his half of the mortgage and live in the house? They also need to know the full procedure to do this.

All advice gratefully accepted
 
It depends on whether she has sufficient income to cover the full repayment. They should also get the house valued to agree a buy out amount.

Sarah

www.rea.ie
 
Sarah W said:
It depends on whether she has sufficient income to cover the full repayment. They should also get the house valued to agree a buy out amount.

Sarah

www.rea.ie
Click to expand...


My sister earn about €37,000 pa so I doubt the bank would let her take over the full mortgage, even if she could afford it. It seems more possible to have my other sister buy in.
 
She would have to get the house valued first.
If the house has gone up in value (which im sure it has)
Say the house goes up 80k in value, she would probably have to hand him over 40k (or there abouts, what ever they come to in an agreement)
 
On €37,000 (with no loans and room rental) she'll qualify for €200,000 so yes, she would need a second borrower. The other option of course is to sell the property and buy somewhere else on her own.

Sarah

www.rea.ie
 
What if he doesn't want to move out would your sister be prepared to let him buy her out? This could get very messy.If the value of the house has risen he will be entitked to have the equity. House Value less existing mortgage plus small outlay for solictors fees.
 
Hi,

I can appreciate your sisters situation as found myself in this position 9 months ago, on the upside I am now the sole buyer of the house we were buying together.

Firstly your sister's ex fiance has to agree to be bought out. This will speed up the process a lot. A good mortgage broker should be able to explore every option for her. I actually earned less than your sister at the time and the following options were put to me at that point

1. Get a guarantor for the mortgage. The guarantor would not be named on the title deed of the house. But would probably have to earn more than your sister as they are guaranteeing the mortgage. (hope that reads clearly?)

2. Get your other sister to be just named on the mortgage - depending on who you deal with this can be done, and the house can stay in one name only. And the named sister wouldn't loose first time buyers rights.

Luckily I was promoted and got a decent salary increase but I still had to satisfy certain criteria for the mortgage provider

-Loan to Value on the house had to be less than 75% and I had to lock into a three year fixed interest rate(this turned out to be to my advantage in light of the recent rate hikes). I took 'interest only' option and am now going to rent out 2 rooms to help make ends meet. I know interest only mortgages are getting bad publicity at the moment but it certainly was the way to go for me.

Get a valuation done asap. When my ex finace moved out I got a valuation done and the house was 315k (before christmas)- the equity I paid him was based on this. However, when taking out the mortgage in my name only a valuation had to be done again and the house was conseratively valued at 360k(2 months later in late Feb). It is a tough one to get moving on but acting now will save your sister money. It took me 6 very, very stressful months to get everything sorted - but it paid off
in the end.

Hope this helps.
 
Queen

Are you sure that the other sister will not lose her FTB status:

An oft quoted piece from the revenue:


Any person, who provides part of the purchase monies or who is a party to any borrowings relating to such purchase, is also regarded as a buyer of the house..

except in case of parent/child, guarantor/child.
 
It's unlikely that the loss of your sister's FTB status would exceed the benefits of getting onto the property ladder unless there are Stamp Duty issues as your 2nd sister is buying into a second-hand house etc. You really need good legal advice.
 
NorfBank,

Thats the information I was given by my Mortgage Broker as my brother had offered to be a guarantor for me if needed, or be named on the mortgage just to help me secure the mortgage - although I was going to make the repayments myself.

I do remember discussing this at length with the Mortgage Broker at the time as I felt my brother would have been sacraficing a lot to help me out if he lost his first time buyers rights.
 
As DB74 says, legal advice required on this one but the revenue website seems clear.
Was your brother going as guarantor or joint applicant?
 
In the end neither, but both options were presented to me.
 
From Revenue

What is the position where the purchase monies are not provided entirely by the first time buyer?
To qualify for the relief the entirety of the purchase monies, including any borrowings, must be provided by the first time buyer. Any person, who provides part of the purchase monies or who is a party to any borrowings relating to such purchase, is also regarded as a buyer of the house and the relief will not be available unless that other person is also a first time buyer. …
The basis for this treatment is that, in such circumstances, the house is held for the person providing the monies used in the purchase of the house by way of a resulting trust presumed in favour of that person. This treatment applies whether or not all the parties providing the purchase monies, or all the parties to any borrowings, are actually named in the deed of transfer.
Notwithstanding this treatment, to take account of particular situations, Revenue is prepared to accept that a child, who is a first time buyer, will not be precluded from claiming first time buyer relief where a parent acts as a co-mortgagor in the following circumstances:
• The transfer of the house is taken in the name of the child.
• It is the intention of both the child and the parent that the parent is not to take a beneficial interest in the house.
• The parent has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase.
• It is not intended that the parent will be contributing to the repayment of the mortgage in the normal course.
Where the four conditions set out above are satisfied, Revenue will treat the parent as effectively acting in the role of guarantor for the loan.
Consistent with the above approach, Revenue will also be prepared to treat persons other than parents of the first time buyer, who satisfy similar conditions to those set out above, as effectively acting in the role of guarantor for the loan. Their involvement in that capacity will not be treated by Revenue as precluding a claim to first time buyer relief. In such circumstances the conditions are as follows:
The transfer of the house is taken in the name of the first time buyer.
• It is the intention of both the first time buyer and the other person that the other person is not to take a beneficial interest in the house.
• The other person has been joined into the mortgage solely at the request of the lending institution for the purpose of providing additional security for the monies being advanced for the purchase.
• It is not intended that the other person will be contributing to the repayment of the mortgage in the normal course.
The relief from stamp duty is intended to benefit only genuine first time buyers and Revenue will continue to use our audit programme to ensure that there is no abuse of the relief.


mf
 
Any person, who provides part of the purchase monies i.e a joint applicant

or who is a party to any borrowings relating to such purchase i.e a guarantor

So you will lose your FTB status if you go as guarantor or joint applicant unless in parent/child transactions?
 
Consistent with the above approach, Revenue will also be prepared to treat persons other than parents of the first time buyer, who satisfy similar conditions to those set out above, as effectively acting in the role of guarantor for the loan. Their involvement in that capacity will not be treated by Revenue as precluding a claim to first time buyer relief.


mf
 
"My sister and her fiancee may be splitting up

and I don't think he will will be her fiance for much longer either. He was caught playing off side and she is having a tough time so we need to help her sort out the house at least"

As I know nothing of the gory details, this might be completely inappropriate, but I think you should move very carefully before doing anything which might push your sister in the direction of a break-up. It may well be that the fiance is a bad piece of work; or it may be the case that he had a really bad but uncharacteristic lapse in his behaviour. Even if you think that your sister would be far better off without him, I think you should keep this opinion to yourself until your sister makes this decision on her own. Then, by all means, do all you can to help her in her decision. If you now start to 'sort out' the house issue, it is in some respects tantamount to nudging your sister in the direction of a breakup. If she then reconciles with him, it may leave awkwardness between you and her. And if she breaks up but later has regrets, she may feel with hindsight that her siblings pushed her in the wrong direction. I suppose all I am saying is that in these situations, it is hard to do right for doing wrong, so tread carefully.
 
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