Mortgage / cash combination & joint purchase

Basil_Hume

Hello all, :money:

My partner and I are hoping to start looking to buy a home soon.

We are in a fortunate postion in that my partner has approximately £200k in cash, from which she currently draws about £600 a month in interest - either to be re-invested or support herself day-to-day (she chose a less than lucrative career). I only have £5k in cash although I earn a secure income, from which I currently support us both by quite comfortably paying all our rent and some bills.

We'll be looking at £200-250k for a house, so will be considering a mortgage of up to £50k. We could spend less, but then I would have no stake in the house and at some stage we'll need a mortgage anyway to buy a bigger house as we age.

As a complete novice in such matters, I have a few questions:

1. Does a mortgage in my name (as opposed to joint) make sense? I'll be paying it all via a bigger contribution to our joint bank account.

2. I presume joint ownership of the house will need to be formalised - what's involved?

3. Do I / we need to pay a deposit for a mortgage that will only be about 20% of the house's market value?

4. I guess I / we need to choose a shorter term of mortgage than the usual 25 years, since the borrowed sum will be less than most.

That's all I can think of right now, but I'd be grateful for any suggestions and extra issues we should be considering!

Basil

Ian_W

Hi Basil,
1. No, the names on the mortgage have to be the same as the names the property is registered to so that the lender can repossess in the event of default. Can't see your GF being too pleased at sinking circa £200K in the property without being on the deeds - you could try it though!
2. Joint ownership will be established by your names being on the "deeds" at the Land Registry. However, you'll need a solicitor to do the conveyancing so you might want to consider a formal document/agreement as to who gets what if you split up [OK you wouldn't be buying together if you thought that likely - but you never know] and also think about drawing up Wills in case something unexpected happens [again I know you've no plans - But?].
3. You will need to put a deposit on the house but not the mortgage - £200K cash will be more than enough!! You will have fess to pay like arrangement fees, lenders valuation, solicitors etc. Stamp Duty jumps from 1 to 3% over £250K.
4. No, the usual term is 25yrs but subject to lenders conditions you can chose longer or shorter if you wish.

Good idea to have a mooch around the mortgage section of the site to get more clued up and there are some stickies on the housing forum well worth a read.

BoL.

Names familiar - you wasn't a Cardinal once was you. :rotfl:

malky39

This may sound stupid but why would you want a mortgage when you could just buy a house with what you have and be mortgage free. And why if you had that have you been renting property as i find that renting property is basically throwing money away.

Basil_Hume

Thanks both - that gives me a grounding in what I need to know.

My partner could certainly buy a house for under £200k and leave us with no mortgage. However, I can't see how I could save enough to afford the next step (e.g. up to £250-300k) in a timescale under 10 years - during which time we may consider kids, moving to another part of the country etc.

The reason we've been renting over the last few years is that we've moved around a fair bit - we've only really "settled" here since moving in March... and then my partner went travelling for 5 months in April! Essentially, it's been a case of needing flexibility in the past.

Nonetheless, I will have another look at the sums.