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That's a lot of variables.
First and most importantly, do you and GF want to live there?
Your cost savings sound reasonable. But you would still have costs around transferring ownership from BF to you. A factor in favour is whether you and GF could buy something similar (factoring in it will only be 50%).
I would sit down with your GF and work out what your ideal scenario is for the next 5yrs. What circumstances would cause you to sell between now and then?
You absolutely need a side contract between all of you to map out what happens in the various scenarios - break-up, death, unemployment, relocation, etc.
You mention selling in 1-2 years. Personally, unless you have a very specific plan mapped out I would be wary of owning a property for less than 3-5yrs at the moment. Is it at all likely you and GF would be able to buy Sister out in 1-2yrs?
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hugo7
A few months ago I was posting in here about my GF and my first explorations into buying our first home, and received some very helpful advice. At the time we decided that our slightly uncertain job security meant that the moment was not quite right. We've been renting since then. However, my sister and her BF have recently split up and need to disentangle themselves from the house that they own together and there is a suggestion that my GF and I buy out my sister's boyfriend.
The potential deal (as I understand it) is that the property is probably worth around £275,000 (at a guess) and that my sister and her BF both own stakes that they estimate are worth approximately £40,000 each. My GF and I would then pool our deposit money to buy out the BF’s portion so that my GF and I would own the property jointly with my sister. My GF and I would live in the property and pay the mortgage contributions (based on the current mortgage, the contributions appear to be about the same as our existing rent) while my GF would act as a silent investor. When the time comes to sell the property, my GF and I would hope to recoup our £40k stake plus the relevant amount of mortgage repayments while my sister would recover her initial £40k (all of us would also hope to benefit, in proportion, from any gain in house prices).
The logic behind this plan is (a) that it would help my sister out, but more importantly (b) we anticipate that this would be cheaper than the counterfactual of us buying a comparable but different house without my sister's involvement.
My main difficulty, is calculating roughly what this proposal might save us when compared to the counterfactual option. Below are some of the potential savings and costs that we might encounter but I’m sure there are many others that we’ve not thought of:
Stamp duty (saving ~ £4000?)
Surveys and other expenses (saving ~£5000?)
Other tax implications (unknown)
Lower mortgage repayments with £80k deposit rather than £40k (unknown)
There are also some wider considerations such as the potential for house prices to fall (it strikes us as likely with Brexit?) and the potential impacts of rising interest rates. Also, it isn’t unrealistic that we would be forced (or want) to sell in 1-2 years either if my sister needs to liberate her stake or if our job statuses change.
All things considered, I think that we would only proceed with this if the potential savings make it a “no brainer”. Our job situation means that we had already temporarily suspended our house buying aspirations and while we can see that this new house was clearly very well suited to my sister, it certainly wouldn't have been the house we would have chosen and not in the same village. Therefore, we would need a very favourable deal to make it workable for us.
Does this sound like a stupid idea? What am I missing? what are the important things I need to consider?
I'm trying to book an appointment with a financial advisor but there is also a lot of useful experience in here.