Joint Mortgage - 66 yr old Father & Son

letitroll

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Looking to purchase a property with my son. I'm 66, he's 38. It will be a joint tenancy arrangement.

The purchase price will be 500,000: 50% will be funded by me in cash (250k) with the remaining 50% funded by him with a mortgage hopefully (220k mortgage, 30k deposit)

Can anyone advise, before I speak to a bank, around what might be a banks approach or concerns around this?

- Would they lend only to my son but comfortable around the joint ownership status I would obviously remain on deeds (as you can see total LTV would less than 50%)?
- Would they require me to also be party to the loan agreement? Would my age be a barrier here?
- Any issues I may not be considering....want this structured so as to ensure everyone (including my other children's inheritance) is protected?
- Broadly has anyone seen this type of arrangement work previously?

Thanks in advance for any insights
 

luckystar

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Is your son earning 60ish thousand?
This was all the rage in the 2000s before the bust but I'm not sure how the banks deal with these applications now.
Any option to gift the amount? Or a loan?
 

Monbretia

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If we were talking the 2000s then you would more than likely need to be a party to the loan but the term could be based on the youngest applicant so your son. Don't know what changes there are now days but it seems to be loosening up seriously again. I'd imagine they will definitely want you on the loan or at the very least consenting to the mortgage in some way as their charge on the property has to rank ahead of your ownership.
 

Gordon Gekko

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I don’t believe a bank will entertain this unless you are a meaningful client of one of the private banks.

What are you hoping to achieve? i.e. do you want to have a 50% share or is this some form of family wealth planning?
 

Bronte

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- Would they require me to also be party to the loan agreement? Would my age be a barrier here?
- Any issues I may not be considering....want this structured so as to ensure everyone (including my other children's inheritance) is protected?
- Broadly has anyone seen this type of arrangement work previously?

Thanks in advance for any insights
I believe they'd want you party to the mortgage and will not entertain this due to your age.
You'd have to make a will to ensure your other children will inherit as you wish. But this could be messy with your estate tied up in a property with one son, even if it's a joint tenancy.
As regards insights. It sounds messy. What is the benefit to you of this arrangement. Who came up with this idea?
 

letitroll

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Thanks for the replies. Update on this........seems no Irish bank pillar or otherwise will entertain this structure as indicated by previous replies.

The only option would be the sole mortgage in my son's name with me making up the difference in cash. Could some bilateral agreement be created between my son and I with a solicitor that would create a lien or obligation on my 50% of the property to protect the estate do you think?

Bit more background to understand why this is attractive.................benefit here is that it provides an opportunity for me to downsize from my existing home here & free up equity & create a cash cushion in my retirement.........the new house has granny flat type setup I would live in .................the benefit to my son would be that he gets to leverage a mortgage and we would in effect become partners on the part of the house that would be rented out to tenants with me managing this for us both...............50% of the rent would cover his mortgage, my 50% of rent would become an additional income stream in retirement to boost my pension income. It an attractive proposition for us both if we can get a structure that works.
 

llgon

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the benefit to my son would be that he gets to leverage a mortgage and we would in effect become partners
The use of leverage will normally greatly increase the risk to the mortgage holder/lender of a future reduction in value of the property. However in this case the only likely risk to your son is the loss of his 30k deposit. It is the 250k investment by yourself which is at risk to yourself/ your estate.

Have you discussed the plan with the rest of your children? You say you want to protect their inheritance, I don't think this is a good way.

A legal agreement with your son may not prevent problems after your death if he is unable or unwilling to buy out his siblings' share or sell the property (which he owns 100%).
 

Bronte

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benefit here is that it provides an opportunity for me to downsize from my existing home here & free up equity & create a cash cushion in my retirement.........the new house has granny flat type setup I would live in .................the benefit to my son would be that he gets to leverage a mortgage and we would in effect become partners on the part of the house that would be rented out to tenants with me managing this for us both...............50% of the rent would cover his mortgage, my 50% of rent would become an additional income stream in retirement to boost my pension income. It an attractive proposition for us both if we can get a structure that works.
It is an awful pity posters don't post the full facts at the beginning.

Will a bank loan to him on his own?

Your problem is that your name is not on the title. Meaning he can kick you out. You'd want legal advise on how your interests could be secure. Because I don't see a bank being in any way comfortable with your involvement/money/ownership. And therefore I can't see a solicitor signing off on some side deed on it as they have to sign declaratoins for the bank that all is ok.

I think you should post up all the figures on yourself. And tell us how much you want to live on. I'm wondering if you don't have better options. For example converting your own home, making a granny flat for you, and letting out the rest of the house. I have a relation who purchased a house for around 100K and converted it with a one bed for them and the 3 bed let out. Worked out really well. And rent is tax free if under 14K (around) which is pretty nice as that's a neat 1K a month or thereabouts.

Also what level of rent were you hoping for on the 500K house.
 

Bronte

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Have you discussed the plan with the rest of your children? You say you want to protect their inheritance, I don't think this is a good way.
Apart from that people really ought to be thinking about themselves and their own income and retirement before thinking about future inheritences of adult children. I'm hoping to go down in the box having spent all of my children's "inheritence."
 
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