Mortgage for brother to buy family home

Tea drinker · 22-02-2021 3:49pm #1

Hi folks, my mum passed last year and there is a house which my brother is hoping to buy me out of, however it's beyond his reach with cash and he needs a loan / mortgage ~30K.
He is unemployed presently and the banks won't loan him a mortgage.
I think credit union suggested a loan of 15K. So that is not covering the full amount and the repayments on a mortgage would be a bit cheaper if he could get one. I'm employed, is it feasible or advisable to go in as a guarantor on the loan with him? What are the risks here, what if I lost my own job? Obviously the What if can't pay in the future?

What about his taking the 15K from credit intially, and "loaning" him the 15 balance he owes me till the first 15 is paid?

Is there any sort of housing initiative that can help in this case?

namloc1980 · 22-02-2021 3:56pm

It is not advisable to go as a guarantor. Either way if he is unemployed the bank's won't lend him anything regardless if you go as guarantor or not. I don't know the specifics but the Credit Union giving him €15k when he is unemployed sounds bonkers.

Anyway he owes you the money so why would you go guarantor on that? If he defaults on the loan you would then be on the hook to pay it as a guarantor. A lot of people got burned very badly during the boom times when they went guarantor to help family members get mortgages only for the mortgage to default and the demand letters from the bank to start coming through the door to guarantors.

TheBoyConor · 22-02-2021 4:49pm

Loaning an unemployed man 15k? You might as well sell out to him for 15k at that rate because you will never see a penny of the other 15k.

Henry Ford III · 23-02-2021 1:49am

TheBoyConor wrote: »

Loaning an unemployed man 15k? You might as well sell out to him for 15k at that rate because you will never see a penny of the other 15k.

Unless you are Mystic Meg you can't say that with any degree of certainty.

Peoples financial circumstances can change in an instant.

banie01 · 23-02-2021 1:53am

You want to go as guarantor on a loan to enable your brother to buy out your share of an inheritance?

So when you get paid, and he defaults?
You repay the loan used to buy your interest?

You do see the issue there don't you?

bilbot79 · 23-02-2021 1:58am

Just retain whatever equity he can't buy and let him buy into it bit by bit as he gathers the cash. Presuming you can wait that is. Otherwise maybe you should just buy him out and own the asset instead

frankston · 23-02-2021 5:10am

If you rent the
house you both get some income and if he saves it he could buy you out then perhaps, but I guess that might change his status and benefits just an idea

Big Bag of Chips · 23-02-2021 5:21am

Do you need the cash at the moment?
Does your brother intend on being unemployed for the foreseeable future?
The sensible option would seem to be to wait until your brother is in employment where he can then get a small mortgage/credit union loan and buy you out.
Otherwise you both sell the property and use the money from the sale to set yourselves up without either of you owing the other.
I'd imagine any solicitor would advise you away from going guarantor on a loan that is money owed to you.

Scratchly · 23-02-2021 5:40am

Sounds like he's just not in a position to afford it. Signing as guarantor to your own debt is very risky. If he can't make the repayments you are fully liable for the money plus interest and it will affect your credit while he'd still own the house.

If you trust him to make the repayments is it possible to agree a rent to buy amount where he pays you each month instead of the bank? He'd save on interest and you'd still retain your share until he has bought you out.

There's also going to be solicitors fees too just to sort the property ownership in addition to what he pays you. That could be another 5k.

Jim2007 · 23-02-2021 9:06am

It seems to me that this is a financial problem wrapped in a human relations problem. When I was a teenager I used to work as what was called a “shop boy” for the local grocer and the only thing I took away from that experience is something he used to say: If you want to keep your friends and relatives don’t go into business with them. And I think it’s something you need to consider in this case.

You need to decide for yourself, what is an acceptable outcome in this situation. Do you need the money or would it be just nice to have, will you be worse off without it? Does your brother need the house, is it his home or just a dream he’d like to achieve? And is it worth loosing both in the process.

I can’t tell you what is right for you, but I would not sign a guarantee on a loan for my brother. He is 55 years old, he lives in a remote part of Ireland and is unemployed. He used to work at the local hotel, but it closed down a few months ago. I’d say it’s doubtful if he will ever find employment again and his ability to do physical casual work as he grows older is going to diminish so the burden of a loan is only going to grow. And in his mind I’d be to blame for having signed the guarantee, but that is just him. So in the end there is a good chance I’d loose both.

HildaOgdenx · 23-02-2021 9:14am

Do financial institutions still accept guarantees/ use of guarantors?

It doesn't sound like a good proposition, OP, even if they do.

Scratchly · 23-02-2021 9:34am

HildaOgdenx wrote: »

Do financial institutions still accept guarantees/ use of guarantors?

It doesn't sound like a good proposition, OP, even if they do.

The credit union do, but you obviously need an existing and active account. And you won't be able to access your savings as easily. As a guarantor on a loan your money is somewhat held as collateral. And withdrawals need to be approved. Which will be denied if there are arrears.

So you're not just fully and solely liable for the debt if there's no payments but your own account will be restricted.

It doesn't seem like a great option in this situation.

screamer · 23-02-2021 9:39am

What a messy situation . Better off to sell the asset altogether, and both take your cut. getting loans together is a recipe for disaster, and you could well end up paying it back yourself!

893bet · 23-02-2021 9:42am

When is the last time he worked? What is his employment history like?

How much in cash has he to pay you?

TheBoyConor · 23-02-2021 11:28am

Henry Ford III wrote: »

Unless you are Mystic Meg you can't say that with any degree of certainty.

Peoples financial circumstances can change in an instant.

Well a grown man who is unemployed, and there doesn't seem to be any evidence to show that he wants to change that. I get the impression that he is a bit of a waster to be at this stage in life and not have any sort of motivation to work, or if work isn't available, move away to where the work is.
I wouldn't be too optimistic of every seeing any loan repayments.

Torcaill · 23-02-2021 11:36am

TheBoyConor wrote: »

Well a grown man who is unemployed, and there doesn't seem to be any evidence to show that he wants to change that. I get the impression that he is a bit of a waster to be at this stage in life and not have any sort of motivation to work, or if work isn't available, move away to where the work is.
I wouldn't be too optimistic of every seeing any loan repayments.

Interested to see how you arrive at this conclusion based on the OP post?

TheBoyConor · 23-02-2021 11:40am

It is the impression I get. There was no explanation as to why he is unemployed and no hint that he was looking for work or what proposals he might have to be able to work to get the funds together, instead the idea of a loan from the OP seems to be the only suggestion.
And aside from all that, there seems to be no proposals as to how the brother plans to repay any of the borrowed money, let alone the loan from OP. OP will be bottom priority for repayment.

Torcaill · 23-02-2021 11:44am

And you got all that from the OP or from the follow up comments?

Henry Ford III · 23-02-2021 11:44am

TheBoyConor wrote: »

It is the impression I get. There was no explanation as to why he is unemployed and no hint that he was looking for work or what proposals he might have to be able to work to get the funds together, instead the idea of a loan from the OP seems to be the only suggestion.
And aside from all that, there seems to be no proposals as to how the brother plans to repay any of the borrowed money, let alone the loan from OP. OP will be bottom priority for repayment.

Nobody here benefits from the impression you get. It's based on nothing.

Don't repeat it.

Jim2007 · 23-02-2021 1:22pm

TheBoyConor wrote: »

Well a grown man who is unemployed, and there doesn't seem to be any evidence to show that he wants to change that. I get the impression that he is a bit of a waster to be at this stage in life and not have any sort of motivation to work, or if work isn't available, move away to where the work is.
I wouldn't be too optimistic of every seeing any loan repayments.

A mazing and you got all of that from:

He is unemployed presently

So far it seems the your ability to jump to concussing is the only evidence we have so far.

Mortgage for brother to buy family home

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