How to divide 2 houses and 2 mortgages with sibling ?

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Keengardener1

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First time poster so please go easy if I don't include everything.
I feel I am in a right mess situation is as follows

House 1
In 2004 bought house with my brother .
Only with my name on the deeds and joint names on the mortgages as the plan then was to buy him another house which is what we did so we would both have a house each . We were both every young at the time and were encouraged by our parents and to be honest we didn't really have a clue what we were getting into.

My brother never lived in the house 1 but we both stumped up half the deposit for the 1st house. I have been living in the first house ever since with my now husband and my 3 kids . But the house is very small and we need to move on.

House 2
Around 2006 we remortgaged house 1 to purchase House 2 for my brother. only his name on the deeds and mine on the mortgage. In the end my brother decided to rent out the house as he lost his job so this house is still rented and is tax compliant.
However There is a shortfall every month in the rent of 70 euro which me and my husband pay as our mortgage is on a tracker and our mortgage has dropped by this amount so my brother doesn't contribute anything at all .

House 1
Mortgage -balance €238 k
Sell for 290k
Tracker -1.8
Mortgage 1080

House 2
Mortgage - balance €270k
Sell for 260k
Interest rate 4.4
Rent 1050
Mortgage payment - 1100 ( it is restructured) however still shortfall in rent.
Shortfall is made up from me paying in extra to cover shortfall


Just a couple of things -
How much money do you think I should offer my brother for the sale of house 1 . I want to be fair and will give him back his initial deposit but I have been paying all mortgages and even contributing towards the 2nd house. I don't think it should be split 50/50 .

- I want to get off the mortgage of house 2 but my brother couldn't take over mortgage on his own so I said to my brother that he should sell . He does want to sell as the house is just now a hassle to both of us. He reckons that in another year house 2 will be out of NE so we can sell then with no losses incurred.

Question then is how to we split house 1
 
Something wrong here. It cannot be that House 2 is in your brothers name with no mortgage ? You say mortgage is in your name only. But you also say you remortgage House 1 for this.

What does your brother want out of all this?

He paid so far as I can see, a deposit on House 1 but no mortgage repayments. Presumably he paid a deposit on House 2.

Who does the tax returns for House 2. Are they in both your names.

So far he's entitled to half the equity in House 1, but this is totally messed up due to the fact you are susidising his mortgage.
 
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This is ridiculously complicated.

Did you sign any agreement at the time as to what you were doing?

If nothing was signed, what was the intent? Do you agree what the intent was?
For example,

"I wanted to buy a house and my brother lent me half the deposit and put his name on the mortgage so I could get a mortgage as my salary was not enough. I chose the house and have been making all the repayments since"
or
"We bought a house jointly. Then we bought a second house jointly"

1) What was the deposit on the first house?
2) How much did you remortgage house 1 for , to buy House 2?
3) Did he never live in House 2? So were you both joint owners in practice, if not in deed?
 
Sorry for late reply. I know it's very complicated - a right mess.
We never had an agreement in place I was only 21 years old. Never thought that 10 years later We would still have houses.
I guess you could say we just coasted along hoping that we could just sell the houses and get out of the mess.

thinking about it - we both wanted to help each other get a house each which is what we did. Both houses were worth roughly the same but house 1 has tracker and paying down faster.

Deposit for house 1 - 20 k
Remortgaged house 1 by 30k to pay deposit in house 2.

2. My bro lived in house 2 for few years and rented a room then lost job and moved out. He pays the tax on this property now.
 
Keengardener1 said:
We were both every young at the time and were encouraged by our parents and to be honest we didn't really have a clue what we were getting into.
Click to expand...

cringing to read this, the mentality around in those days was nothing short of ludicrous.
 
OK, let's take this in stages.

1) You should probably sell House 2 now, even if there is a shortfall of €10,000
It's not a profitable investment - the rent is just about covering the interest.
From the lender's point of view, you will be seen as having two mortgages. I doubt you will be able to move home while having this second mortgage in your name.
It's costing you in cash flow.
There is a risk that it could damage your credit rating, if it has not already done so.
Getting rid of it simplifies matters a lot.
Given that your brother is unemployed now and can't contribute to the shortfall, maybe you should simply agree to pay the shortfall.

2) There might be an argument for keeping House 2
What is your brother's employment and financial outlook?
He will probably not be able to get loan approval to buy a house for some time.
If his finances improve, he may be able to return to paying this mortgage on his own.

3) Can you move on from House 1?
Who is your lender? The main banks allow you to move your tracker mortgage, with conditions - BoSI and Danske do not.
Even if you are allowed to move your tracker, you should stay where you are as long as possible as most of the repayments are going to capital repayments. When you do move you will have much more equity in the house.
Has your second mortgage damaged your credit rating? Check your ICB record to see what it says.
You will need a deposit of 20% of the price of a new house. Do you have that? If you want to buy a house for €400k, you will need €80k. You have about €50k equity less €10k to pay off the shortfall on House 2. So do you have another €40k cash?

Brendan
 
Thanks for all advise . I'm going to take on board and go speak with my bank.

And Moneyboard I fully agree the mentality around at the time was crazy. I certainly won't be encouraging my kids to go buy houses together.
 
Keengardener1 said:
Thanks for all advise . I'm going to take on board and go speak with my bank.

And Moneyboard I fully agree the mentality around at the time was crazy. I certainly won't be encouraging my kids to go buy houses together.
Click to expand...
Did your brother not put a penny towards the deposit of house 2?

Is house 2 in any way suitable to your family? With an extension?

How much are your savings and how much the new house?
 
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