|>> || So, first, I am a lawyer, but not a UK lawyer or a real estate lawyer, so I'm speaking now just from general principles of property law in common between the US and UK. Take with grain of salt and consult counsel in your jurisdiction. |
As I understand your post, the facts are essentially this: you and your mother are contemplating taking out a mortgage loan in your names to purchase a home. Your brother will actually reside there, and will be financially responsible for the mortgage payments.
This is a lousy idea.
Remember, when you take out a mortgage loan to finance the purchase of a piece of property, you're borrowing real money. The bank will want that money back. You and your mother will be financially responsible for making those payments, from the perspective of the bank. Your arrangement with your brother is your business, and not their problem.
If he went to prison, or simply stopped making payments because he's a shithead without a job other than fucking day trading penny stocks, you would be on the hook. The bank would begin issuing demand letters for you to payment. These would potentially escalate to debt collection efforts, and, eventually, foreclosure on the house and its sale at auction to satisfy your debt. You can "abandon" the mortgage only in the sense that you could try to sell the house in order to satisfy your debt to the bank.
You're looking at the costs of having to cover rent for any months he doesn't pay, plus the transaction costs involved in securing a mortgage or selling the house to satisfy the mortgage if he bails, plus the risk of damage to your credit. Also, at least in the United States, there would be some risk that a court might view this arrangement as de facto you buying the house and renting it to him, in which case you would have all the legal responsibilities of a landlord (i.e., he could demand that you make repairs, etc.).
>>He'd rather just not pay rent for a place he doesn't own. In his mind he will pay a monthly "rent fee" but instead it would pay for him to own the place.
I read this to mean that under your deal, he would be the one who would be building equity in the house? Notwithstanding that the property and mortgage would actually be in your name?
Look, this is a shit deal. The way to look at this is not in terms of "will it cost me money to enter this arrangement" it's "what are the potential risks". Your brother is asking you to take on ALL the risks of owning a home, taking on debt, and becoming a landlord, PLUS his credit risk (that is the risk of his nonpayment), PLUS all the legal and transaction costs involved in taking out the mortgage and dealing with any eventual sale of the house so that he can enjoy all the benefits of property ownership. If I were advising a client, I'd tell them it was extraordinarily imprudent, no matter what your brother's character is like. Given that he doesn't appear to have gainful employment and has a significant criminal history, I'd tell them it was pants on head retarded, and that said brother is trying to fucking take you for a ride.
Your brother may have "come to the point of his life now where he wants to buy a house for himself" but he has not come to the point of his life where anybody with enough brainpower to dress themselves should be loaning him money -- and that includes you, even through this silly transactional structure he's proposed.