Inherited house - two siblings looking to buy out one other

P

Paddy_71

Registered User
Messages
6
Hi,
myself and two brothers inherited a house from our late mother last year. One brother wants to sell up his third and the other two of us want to try and buy him out.
So the scenario is one of the buyout brothers is living in the house all his life - unmarried, no kids, no other property or mortgage (late 40's).
I have my own home and mortgage and won't be living there.

The brother living there (or I) couldn't afford or get a loan by ourselves to complete the buy out, so to do this we wanted to look at getting a mortgage jointly between us. So to start the process I called up my bank (AIB) explained the scenario, and they said that would be interested.
At this time the mortgage advisor said as my brother was living in the house that this would be residential mortgage.. I called back the next day to follow up further and another advisor said it would be a buy to let as I wasn't going to be living in it, regardless of the status of my brother. Naturally a buy to let mortgage is much more expensive per month which would make this more difficult for both of us and bit more risky for me.

Does anyone have any similar experience with doing something like this and is buy to let the only option ?

Also if anyone has any thoughts on the pros and cons of getting into a second mortgage with a sibling, or experience of same, I would love to hear thoughts on it... as its something I'm not treating lightly as I weigh it all up whether to proceed.

thanks.
Paddy
 
Apart from being a joint owner and what that involves, what's in it for you at the end of the day?
 
We get to hold on to the family home, my brother doesn't have to move, I will have a place to stay when I come up home (which is frequent outside of lock down). We agreed that we would sell up when one of us retires and pay off what ever is owed - so there is an investment output from it as well, that may or may not pay off.
 
Paddy_71 said:
Does anyone have any similar experience with doing something like this and is buy to let the only option ?
Click to expand...
Brother #3 could "lend" you his share and you and brother #2 pay him back at ECB +2% over 10 years.

It could be a win-win. You and brother #2 would get cheaper finance than from a bank. Brother #3 would get a better return than a bank deposit.

If you go down this road better to get it drawn up with solicitors.
 
Thirsty said:
Where will your brother live when that happens?
Click to expand...
He's not sure where he might live in the future (its 15 years away at least) or if we sell up now, he says he thinks he would likely look to buy something smaller or rent.

NoRegretsCoyote said:
Brother #3 could "lend" you his share and you and brother #2 pay him back at ECB +2% over 10 years.

It could be a win-win. You and brother #2 would get cheaper finance than from a bank. Brother #3 would get a better return than a bank deposit.

If you go down this road better to get it drawn up with solicitors.
Click to expand...
Thats a great suggestion, but Brother 3 wants his share now as he needs the money, so unfortunately we can't do it this way.
 
Could you give us the numbers.

1) The value of the house
2) The amount which must be paid to Brother 3
Paddy_71 said:
The brother living there (or I) couldn't afford or get a loan by ourselves to complete the buy out,
Click to expand...

3) The income of Brother Occupier
4) The value of your own home and the mortgage on it.

For example, would it be possible for you to take out a top up on your home to pay off or part pay off Brother 3.

Brendan
 
Paddy_71 said:
He's not sure where he might live in the future (its 15 years away at least) or if we sell up now, he says he thinks he would likely look to buy something smaller or rent.
Click to expand...
I think you should make sure you have an exit strategy; a life event for either of you could change the picture significantly.

Better to talk all these through and have a written agreement, than fall out over it later.
 
Brendan Burgess said:
Could you give us the numbers.

1) The value of the house
2) The amount which must be paid to Brother 3


3) The income of Brother Occupier
4) The value of your own home and the mortgage on it.

For example, would it be possible for you to take out a top up on your home to pay off or part pay off Brother 3.

Brendan
Click to expand...
Yep...
The value of the inherited house is €500k
The amount to be paid to brother 3 is €167K (1/3 of the value rounded figure)
The income of Brother occupier is €30k

My own home is value €280k - 147k outstanding - taking out a top up isn't an option at the minute, also as our house is jointly owned with my partner (she doesn't want in either!) it would be messy.

Thirsty said:
I think you should make sure you have an exit strategy; a life event for either of you could change the picture significantly.

Better to talk all these through and have a written agreement, than fall out over it later.
Click to expand...
We talked about this and said that we put in place some sort of document of agreement (or similar) done with a solicitor that outlines all the terms and conditions.
These are all great questions and suggestions that are helping in thinking this through some more.and about the what if's.. I appreciate them thanks.
 
Paddy_71 said:
We agreed that we would sell up when one of us retires and pay off what ever is owed
Click to expand...

I think you should sell now. The brother at home on €30k would be better off getting his share now too and buying the smaller place now.

The brother who wants his share now would get it and you would also get a nice, tidy lump sum that you could pay towards your mortgage etc.

I think it's pointless waiting until one of you retires and also getting all knotted up in loans etc.
 
PaddyBloggit said:
I think you should sell now. The brother at home on €30k would be better off getting his share now too and buying the smaller place now.

The brother who wants his share now would get it and you would also get a nice, tidy lump sum that you could pay towards your mortgage etc.

I think it's pointless waiting until one of you retires and also getting all knotted up in loans etc.
Click to expand...
I would tend to agree with this from a financial perspective. Insurance costs, house maintenance & LPT etc will be higher on a higher value property.

Also it might be easier for your brother to settle in a smaller place now rather than in years to come.
 
Paddy_71 said:
The value of the inherited house is €500k
The amount to be paid to brother 3 is €167K (1/3 of the value rounded figure)
The income of Brother occupier is €30k
Click to expand...
Brother #2 does not have the means to be living in a half-million house.

You should all sell up and take your shares. Brother #2 and you could buy a place for €330k if you really want to still own property together.
 
Paddy_71 said:
We agreed that we would sell up when one of us retires and pay off what ever is owed
Click to expand...
Another one here that would recommended selling the property now
The Idea that you both will sell the house in 15 years time is IMO a recipe for disaster especially for the brother not living in the house
I would reckon that no mater what you agree now won't matter in 15 years time if the house sitting brother has no where to live
 
Last edited:
You want to borrow €167k at a buy to let mortgage rate of about 5%?

Does the selling brother want the full €167k now?

Do you or the occupant have any money to pay towards the €167k or will you need a mortgage for the full amount?

Can your brother rent a room in the house and so get an income to pay the mortgage?

Brendan
 
Another option to explore, although I doubt it would work out.

Take out a buy to let mortgage.
Rent out the whole house.
Could your brother rent a place cheaply?

Brendan
 
I get that you're trying to help both your brothers here but I don't think you'd be doing brother #1, who lives in the house, a favour nor yourself for that matter. There are too many 'what ifs'. What if either of you get ill, lose your jobs, fall out, refuse to sell in 15 years? What if, on 30K, he can't keep up with the mortgage, house maintenance, bills, etc.
You might all be better off to sell and help, financially or otherwise, brother #1 buy a house/apt of his own - something he can afford to maintain and won't have to move in 15 years. I think you'd all be happier in the end.
Selling the family/parents home was one of the toughest things I ever had to do and, years later, I still wish we could have kept it but it would have been the worst mistake ever. We would be asset/house rich and cash poor - instead we now have a mortgage free house that is more suitable to our needs and more easily maintained.
Good luck with all this.
.
 
Brendan Burgess said:
You want to borrow €167k at a buy to let mortgage rate of about 5%?

Does the selling brother want the full €167k now?

Do you or the occupant have any money to pay towards the €167k or will you need a mortgage for the full amount?

Can your brother rent a room in the house and so get an income to pay the mortgage?

Brendan
Click to expand...
Yep the selling brother needs his share now - unfortunately we would need the full amount in the form of a mortgage loan.
Regarding renting a room I have put this to my brother, he wasn't too hot on doing this (didn't rule it out)...but I get that as it would be a tough adjustment at this hour of his life to take in a tenant.

Smaug~~°w°~~ said:
I get that you're trying to help both your brothers here but I don't think you'd be doing brother #1, who lives in the house, a favour nor yourself for that matter. There are too many 'what ifs'. What if either of you get ill, lose your jobs, fall out, refuse to sell in 15 years? What if, on 30K, he can't keep up with the mortgage, house maintenance, bills, etc.
You might all be better off to sell and help, financially or otherwise, brother #1 buy a house/apt of his own - something he can afford to maintain and won't have to move in 15 years. I think you'd all be happier in the end.
Selling the family/parents home was one of the toughest things I ever had to do and, years later, I still wish we could have kept it but it would have been the worst mistake ever. We would be asset/house rich and cash poor - instead we now have a mortgage free house that is more suitable to our needs and more easily maintained.
Good luck with all this.
.
Click to expand...


Thanks everyone for the replies, it's great to get these opinions and suggestions from others who are independent of the situation.
Without doubt selling the family home is very tough and it is very much a factor here for us, but from reading the comments (and this last one strikes a cord - thanks for that) my brother and myself need to separate heart from head on this and have another conversation. As the more I think through whats being said here, probably the best thing for all of us maybe to look at the other (hard) option and sell up.
 
Last edited:
And if you do decide to go ahead, have a legal agreement for what happens if
- You die ( who inherits your half), does he have a right to continue to live there
- He dies (who inherits his half)
- Your marraige breaks down (your half is an asset)
- He marries or is in a long term relationship
- You have financial problems and need the money
 
It seems to me that selling the house is the best idea.

But keeping the house is not an irrevocable decision.

If you can get a mortgage and pay off the brother, you can keep the house. Then if it's not working out after two years, you can sell the house.

The biggest problem for you is that if you take out a mortgage with him, it will be joint and several. If he does not keep up the repayments, then your credit record will be damage. So, in effect, you would have to make the repayments, and he should pay you the money.

He has to make choices here.

1) Sell the house and trade down.
2) Keep the house and take in a tenant.

I think he should experiment with 2) first, but you need some cast iron document from him where you can decide to sell whenever you want.

Brendan
 
huskerdu said:
And if you do decide to go ahead, have a legal agreement for what happens if
- You die ( who inherits your half), does he have a right to continue to live there
- He dies (who inherits his half)
- Your marraige breaks down (your half is an asset)
- He marries or is in a long term relationship
- You have financial problems and need the money
Click to expand...
As well as these scenarios there are undoubtedly more that would make the scenario messy to deal with.


Brendan Burgess said:
I think he should experiment with 2) first, but you need some cast iron document from him where you can decide to sell whenever you want.
Click to expand...
Recipe for disaster.


As someone who bought with a sibling I'm very wary of this. There are so many things that can go wrong. Just sell up and move on. It's only a house.
 
You must log in or register to reply here.
Back
Top