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    • Ginric99
    • By Ginric99 11th Oct 16, 3:15 PM
    • 3Posts
    • 1Thanks
    Ginric99
    Advice needed buying house from wife's brother over several years
    • #1
    • 11th Oct 16, 3:15 PM
    Advice needed buying house from wife's brother over several years 11th Oct 16 at 3:15 PM
    Hi al just trying to get some initial info before we go to solicitors really.

    The situation is as follows, my wife's brother owns the old family home (having bought her and her brother out of there share when the estate was all sorted following there fathers death). He is now looking to sell and we would like to buy it off of him.

    However due to various issues the last few years our credit rating is shot and so we are unable to get a new mortgage. Therefore what we have discussed is the following.

    Get a valuation of the house as it is now
    Sell our house (has around 45k equity in it)
    Pay her brother a lump sum from the equity as a payment. We believe around 30-35k will cover the equity he has in the house.
    Agree to continue making mortgage payments either to him or direct to the mortgage company if they will allow a third party to do that. However the house stays in his name.
    In a few years time when we are able to get a mortgage take out a mortgage to cover the remaining mortgage amount and take over the house.

    We will get a solicitor to draw up an agreement and her brother will also refer to this in his will. We will also be responsible for insurance (contents and buildings)

    So my question does anyone see any issues with this at all?
Page 1
    • muhandis
    • By muhandis 11th Oct 16, 3:28 PM
    • 231 Posts
    • 87 Thanks
    muhandis
    • #2
    • 11th Oct 16, 3:28 PM
    • #2
    • 11th Oct 16, 3:28 PM
    Assuming that your wife's brother has a residential mortgage, I think one of the conditions is that he has to be living in the property. I can't see them viewing the arrangement that you have described in a favourable manner.


    Hi al just trying to get some initial info before we go to solicitors really.

    The situation is as follows, my wife's brother owns the old family home (having bought her and her brother out of there share when the estate was all sorted following there fathers death). He is now looking to sell and we would like to buy it off of him.

    However due to various issues the last few years our credit rating is shot and so we are unable to get a new mortgage. Therefore what we have discussed is the following.

    Get a valuation of the house as it is now
    Sell our house (has around 45k equity in it)
    Pay her brother a lump sum from the equity as a payment. We believe around 30-35k will cover the equity he has in the house.
    Agree to continue making mortgage payments either to him or direct to the mortgage company if they will allow a third party to do that. However the house stays in his name.
    In a few years time when we are able to get a mortgage take out a mortgage to cover the remaining mortgage amount and take over the house.

    We will get a solicitor to draw up an agreement and her brother will also refer to this in his will. We will also be responsible for insurance (contents and buildings)

    So my question does anyone see any issues with this at all?
    Originally posted by Ginric99
    • Ginric99
    • By Ginric99 11th Oct 16, 3:37 PM
    • 3 Posts
    • 1 Thanks
    Ginric99
    • #3
    • 11th Oct 16, 3:37 PM
    • #3
    • 11th Oct 16, 3:37 PM
    He isn't living at present and has never lived there has a buy to let mortgage as was renting it out so don't see that being an issue.
    • amnblog
    • By amnblog 11th Oct 16, 3:43 PM
    • 8,860 Posts
    • 3,375 Thanks
    amnblog
    • #4
    • 11th Oct 16, 3:43 PM
    • #4
    • 11th Oct 16, 3:43 PM
    He cannot have family in the property with a standard buy to let mortgage. Nor can he sell a chunk to you whilst it is mortgaged.


    Also, I am a bit baffled why you would pay him £45K to cover his equity of £35K and then pay him further funds after that.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Ginric99
    • By Ginric99 11th Oct 16, 3:51 PM
    • 3 Posts
    • 1 Thanks
    Ginric99
    • #5
    • 11th Oct 16, 3:51 PM
    • #5
    • 11th Oct 16, 3:51 PM
    No we will pay him 30-35 depending on valuation then keep the remainder for ourselves we won't then pay him a lump sum just clear whatever is left on the mortgage.

    Mortgage company won't know what our agreement is though surley? Wife is a different surname and I would have thought we are basically just buying a share in the property. As long as we haven't bought more then the equity plus mortgage is worth then no issues. The value will never drop so the house is worth less then the mortgage amount.
    • davidmcn
    • By davidmcn 11th Oct 16, 3:58 PM
    • 3,885 Posts
    • 3,452 Thanks
    davidmcn
    • #6
    • 11th Oct 16, 3:58 PM
    • #6
    • 11th Oct 16, 3:58 PM
    we are basically just buying a share in the property.
    Originally posted by Ginric99
    But you're not - you're just giving him cash in the hope that eventually he'll transfer the house to you. In the meantime he retains 100% of the ownership. What are you going to do if, say, he goes bankrupt in the meantime?
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 4:01 PM
    • 51,336 Posts
    • 43,186 Thanks
    Thrugelmir
    • #7
    • 11th Oct 16, 4:01 PM
    • #7
    • 11th Oct 16, 4:01 PM
    One hurdle to overcome is that the money you pay him will be construed as rent in his hands. Therefore taxable. However you structure the arrangement. The HMRC will deem it to be avoidance.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • JimmyTheWig
    • By JimmyTheWig 11th Oct 16, 4:13 PM
    • 11,468 Posts
    • 11,144 Thanks
    JimmyTheWig
    • #8
    • 11th Oct 16, 4:13 PM
    • #8
    • 11th Oct 16, 4:13 PM
    Why not...
    Sell your house and put the equity into your savings account.
    Then rent the family home from your brother in law. Monthly rent could match the monthly mortgage payments with an agreement that said that you were responsible for any costs incurred by him as a landlord.
    When you are ready, get a mortgage and buy the house from him.
    • Kynthia
    • By Kynthia 11th Oct 16, 5:55 PM
    • 4,703 Posts
    • 6,715 Thanks
    Kynthia
    • #9
    • 11th Oct 16, 5:55 PM
    • #9
    • 11th Oct 16, 5:55 PM
    Would it not be best he transfer the property to your name and pay off his mortgage? Then he could register the debt against the property like mortgage companies do so he has proof of the debt you owe. That way you won't be viewed as tenants, he won't be charged tax on your payments as if they were rent, and he won't be breaking tge terms of his mortgage by having family live there.
    Don't listen to me, I'm no expert!
    • MortgageMamma
    • By MortgageMamma 11th Oct 16, 6:51 PM
    • 6,157 Posts
    • 3,029 Thanks
    MortgageMamma
    How do you know you can't get a mortgage? have you taken professional advice from a whole of market mortgage broker? I see people do this all the time, assume they can't get a mortgage because of credit issues when in reality they can if they have the right deposit.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Yorkie1
    • By Yorkie1 11th Oct 16, 8:08 PM
    • 11,036 Posts
    • 20,633 Thanks
    Yorkie1
    Why not...
    Sell your house and put the equity into your savings account.
    Then rent the family home from your brother in law. Monthly rent could match the monthly mortgage payments with an agreement that said that you were responsible for any costs incurred by him as a landlord.
    When you are ready, get a mortgage and buy the house from him.
    Originally posted by JimmyTheWig

    As previously mentioned, this is against the T&Cs of the BIL's BTL mortgage
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