Mortgage Question - 2 Friends getting mortgage. - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

mykalberta · 02-05-2010, 07:54 AM

Just wondering if anyone has gone through this before with a bank. My friend brought up the idea. His parents were thinking of helping him buy a condo, he would rather have a house so he brought up the idea of getting a house together.

Does a bank even allow this with 2 separate incomes? How does the mortgage work with qualifying etc, does it use one persons rating or the combined or would we need to form a corporation and each get the mortgage on our own portion etc?

Yes I know the pitfalls, but while I might not trust my friends current financial position since he is still in school I do trust his "millionaire" parents position.

Thank you. I couldnt find anything helpful using the CP search.

Scoopdogg · 02-05-2010, 07:57 AM

His folks would have to co-sign on the mortgage. Basically they are just as liable as he is for paying the mortgage. The bank could come after either of them.

WilsonFourTwo · 02-05-2010, 08:01 AM

Quote:

Originally Posted by mykalberta

Does a bank even allow this with 2 separate incomes? How does the mortgage work with qualifying etc, does it use one persons rating or the combined or would we need to form a corporation and each get the mortgage on our own portion etc?

Just went through looking at this scenario. What the "mortgage specialist" said is that they cannot use the parents income to qualify in conjunction with your friends because they will not be living in the home. Seemed a little odd as I did that exact thing a number of years ago (thanks parents!), but even after pressing the point, she insisted that these are the rules.

Frankly - the parents should just put the mortgage under their name and "Rent to Own" the place to their kid. Likely end up with a lot fewer hassles.

mykalberta · 02-05-2010, 08:15 AM

So basically I would be doing a combo mortgage with his parents?

We are each looking at bringing 100K downpayment (200K total) to a 500K house hopefully, I would have no problem getting my half on my own, its his half that I suspect would need smoothing over.

I am not a fan of banks and have not actually been in one with the exception to get US cash and to use the bank machines in 6 years. I find them to be like car salesman, you dont just go in for a chat, when you go in you better be ready to make a move one way or the other.

Sample00 being the only exception,

Sample00 · 02-05-2010, 08:23 AM

Quote:

Originally Posted by mykalberta

I am not a fan of banks and have not actually been in one with the exception to get US cash and to use the bank machines in 6 years. I find them to be like car salesman, you dont just go in for a chat, when you go in you better be ready to make a move one way or the other.

wow, I just cant win. I use to be a banker and now I sell cars.

Table 5 · 02-05-2010, 08:38 AM

Your next move better not be law school.

Sample00 · 02-05-2010, 08:42 AM

Quote:

Originally Posted by Table 5

Your next move better not be law school.

way too old for that! hahaha...Mr. Troutman paging Mr. Troutman!

troutman · 02-05-2010, 09:06 AM

It could happen a couple of ways:

1) Parents go on the title and the mortage with the child - the lender might allow the parents to come off when a pattern of regular payments has been proven

2) Parents not on title, but personally guarantee the mortgage - if the child defaults, the lender can collect from the parents, in addition to the other remedies they have

tkflames · 02-05-2010, 10:48 AM

Two Friends don't get a mortgage together...two business partners do. A lot of people could have spared themselves a lot of headaches in my life by making this distinction.

VladtheImpaler · 02-05-2010, 11:11 AM

Just to follow-up on tkflames point, unless you guys are a couple (not that there is anything wrong with that), you should sign something like a joint-venture agreement. Friends are friends, money is money...

Mike Oxlong · 02-05-2010, 11:42 AM

There should be no problems getting this mortgage set up.

Just so I understand correctly you would be using your income and credit to qualify with your friends and if neccesary his parents as co signors?

I don't see any issues being able to make this happen at all. Especially if the parents have as strong of a financial position as you say.

Down the road once your friends financial situation improves and he wants to remove them from the mortgage so it is just the 2 of you you can request that they be removed from covenant (have to double check my terminology). There are some legal fees to do it but I am sure Torutman can help you out with it.

I am kind of surprised your mortgage specialist told you that the parents couldn't co sign if they didn't live in the property. I have done tons of mortgages where kids get parents to co sign and help them out with their first place. Obviously the parents aren't living with them. Whoever you are speaking with is WAY off base or I am misunderstanding something. (Sorry this was from another posters scenario. His mortgage "specialist" is way off base)