Buying house for cash and then getting mortgage on it?

Pegs109

Hi I wonder if anyone can give me some advice please...

we are about to put an offer in to buy a house, we already have a large deposit and a family member has agreed to lend us some money so we can pay total amount in cash and hopefully clinch the deal as we feel there will be lots of competition from other buyers.

Obviously at some stage we will need to pay family member back so will need to get a mortgage. But it's something that would be arranged after we've bought the house iyswim. So...is it possible to do this in principal as in effect we would already 'own' the house? Would it work in a similar way to getting a first time buyer mortgage? a remortgage? a loan? If it would have to be a loan would i have to pay higher interest rates than i would a mortgage?

We already have a mortgage in principal from other properties we have viewed so we know we can get a mortgage no problem. We will be carrying out a full survey on the house.

We will probably see a mortgage advisor about this but thought we'd ask on here first

Thanks for any advice

happybroker

you can get a mortgage alright but most lenders will want you to have owned the property for 6 months first. If your mortgage advisor is any good he should be able to rush this through for you anyway, I would go down that route if possible.

Pegs109

Thanks for your reply Happybroker. The 6 months thing shouldn't be a problem, I'm sure we could pay 'rent' in the meantime. Now to find a good broker!

Conrad

Be aware I've come accross situations where an adviser has proceeded on the basis of a remortgage which thus tends to come with free valuation and legals and a particular remortgage rate, however late in the day lender has insisted the deal is not a remo as no pre existing mortgage was present.

A fresh adviser without sufficient experience may not be aware as they do not teach this sort thing in training.

Mini_Bear

Does this family member want their cash back in one go or are they happy for you to pay some interest on it and pay it back monthly - like a small mortgage payment?
Doin the latter would be best as you will not incur fees for a mortgage and everything else associated with the process. paying your family memeber interest of say 4% will be better for them than wat they can achieve from a bank acct net rate, and you will pay less interest than a standard mortgage.

Pegs109

Thanks Mini Bear. Yes we had thought of that and are hoping family member will come up with that idea too as maybe not our place to ask at the moment

Jacka87

I have just done the exact same thing. I currently pay the mortgage interest only back to my parents who lent me the money based on the equity in there home.

I could not get a mortgage at the time of buying as I was just graduating but I am now in my first proper job and nearly at the end of my probation period and thus I am looking for a mortgage. I have had no provider say they will not remortgage as I officially own the property 100% and therfore you should be able to re-mortgage after you have everything sorted.

However if you can pay back your family bit by bit, essentially have them as your provider then that would prob work out best for you, no fees etc. However, I do have a security letter wrote by my parents & my lawyer that states that I owe them the money. This is needed, incase you fall out etc but also for a few other legal reasons, it is probably best you do something similar.

Hope that helps