Rent Private or Buy from Family?? Help!!

McKneff

If they say no to this, does this prove that they're not at all selling this to us because it's best for us, it's so they dont have an empty property if we rent somewhere else?

Got it in one !!!!!

penguine

Vness81 wrote: »

We buy 50% (or whatever %) of this house, say if inlaws would sell it to us for 100k, we get a mortgage for 75k, we have the 50k for th ehouse and 25k to build an extension. We pay rent to inlaws for their half, or if they accept we buy their half from them but monthly.

If house prices continue falling for several years (which they are extremely likely to do), are you going to be buying from your in-laws in instalments at the price you paid, or the new (lower) price?

Vness81 wrote: »

That way, we build a bigger house, we don't need to get the biggest mortgage, and once it's built it will add value to the house, which means inlaws share grows as well as ours, although there will be difficulty in selling and affording even bigger or judt different, if the inlaws will want their 'new share' paid back when we move.

If the value of the house falls by more than the value added by the extension (which is entirely possible if house prices continue falling very steeply) then both your share and your in-laws' share has fallen in value and how are you going to decide what's a fair amount to repay them?

I think the problems with this idea though are not just the financial implications of buying (or part-buying) in a falling market. You are risking getting into a very sticky situation with family members that could impact on your relationship with them for years to come.

If you continue renting and saving and your income increases as your children get older, then you're going to be in a great position to buy in a couple of years when it's extremely likely that house prices are going to be markedly lower than they are now.

We're in a very severe recession; house prices are falling very steeply.

Vness81

I think we have a few options that all depend on the inlaws..

I think we can only get 75% motgage, and the house hasnt been valued but going by the others close by, I think this house is worth £122-£125K
So we can borrow around £93k. Now if Inlaws agree to sell to us for that, it is worth us buying it? Sitting on it for a year or so til Im in full time employment, and we have a higher joint income to be able to increase the mortgage. Then we buy a bigger house at say £150k, our house now would be worth £125 say, then we only need to increase the mortgage by £25k.
Houses prices will go up and down but the difference between the two will still be the same.

Or.....We ask inlaws to sell us 50% of the property, we get the 75% motgage for £93k, build the extension, then pay inlaws £200 month rent, (or possibly to buy their half, paying for it monthly) And we stay there as we've built on it, and when we paid off mortgage we look at selling? But if we're paying them rent, it will be difficult to sell....

Vness81

If house prices continue falling for several years (which they are extremely likely to do), are you going to be buying from your in-laws in instalments at the price you paid, or the new (lower) price?
(sorry don't know how to quote properly!!)

If the house is worth 125k, & we split it 50/50, his half is worth 62,250, which he agrees we pay 200 month rent on or buy. If house prices still fall & his share is then worth say 55k, I will still pay 200 a month & it will more than likely be at the original price, same as if the house prices do actually rise, I wont be paying any more!!!

Although we haven't even asked them if they'll do this yet, our attempt at asking if they'll go into buying a house with us they really wasn't interested!!! So even this option might not be appealling to them.

penguine

Vness81 wrote: »

We buy 50% (or whatever %) of this house, say if inlaws would sell it to us for 100k, we get a mortgage for 75k, we have the 50k for th ehouse and 25k to build an extension. We pay rent to inlaws for their half, or if they accept we buy their half from them but monthly.

Not sure what the cost of a decent sized extension would be (and that's assuming you can get PP) but 25k sounds a bit low. Plus you have to factor in the inconvenience of having the work done -- everyone I know who's had an extension done had to move out for part of the time it was being done (knocking through is the messiest bit).

You say your husband wants to move, and you don't seem keen on staying in this house for long, but you sound like you're trying to figure out a way to do it! Shared equity in a falling asset equates to shooting yourself in the foot financially. It wouldn't be your in-laws helping you out, but you helping them out, even if they're cutting the price by 10% off the current value.

From Moneyweek:

...despite the 20% or so fall in house prices from the peak, the UK house price to earnings ratio is still around 4.8. That's still way out of line with the long-run trend, of between 3.5 and 4 times. That means house prices still have to fall another 17-39% before they reach their "fair value".

brightonman123

keep renting (re you getting family discount?!), and also see if you can get an option to buy in a few years..?

in meantime try and build up a deposit and get a mortgage, for whatever house you go for..

Vness81

Right, I think we know what we're going to do...
After a few more texts to the Inlaws, the responses were obvious that they were only going to do the one deal on their terms which was sell us the house with 10% off the current value.

Bad as it sounds, when they leave this earth, whatever they have will be split between my husband and his brother, so instead of getting a hefty mortgage, and the stress of trying to make it work, we'll leave it & rent the big house that we love and would never ever be able to buy.

We are going for a second viewing tomorrow & then will get the paperwork and have a good read.

If anyone has any advice on what questions to ask the LA and what to be aware of, that would be great. I think we have to part with around £200 for fees etc, does this sound right?

Geenie

Good luck Vness81. My advice when viewing a rental property is don't get blinded by the bling and concentrate on the fabric and services. Turn every tap on, ask to see the central heating working, ask about the neighbours, and survey the outside very carefully. Make sure you are fully aware about what you are getting and the costs. If managed by a LA you have to be clear about what and when they will charge.

Go away with all this information and then ask to view again in a few days time after reflection. Then make your decision.

McKneff

Vness81 wrote: »

Right, I think we know what we're going to do...
After a few more texts to the Inlaws, the responses were obvious that they were only going to do the one deal on their terms which was sell us the house with 10% off the current value.

Bad as it sounds, when they leave this earth, whatever they have will be split between my husband and his brother, so instead of getting a hefty mortgage, and the stress of trying to make it work, we'll leave it & rent the big house that we love and would never ever be able to buy.

We are going for a second viewing tomorrow & then will get the paperwork and have a good read.

If anyone has any advice on what questions to ask the LA and what to be aware of, that would be great. I think we have to part with around £200 for fees etc, does this sound right?

good luck with everything Vness81 - hope youre happy in your new home:j