Council house buying, Scotland

Dougiedhu

HI,

We have the chance to buy my mother in laws' council house for £21000, 60% discount , 3 Bedroom house. We are first time buyers, the house has to be purchased in her name, although we will be paying for it, which we can then change after 3 years, to ours. HBOS have offered us a mortgage of £124 P/M over 40 years which equates to £65000 repaid price.

Any help or advice would be greatly appreciated as I have no idea what I am about to enter into, but, that seems a bit extreme.

Thanks

Pal

What is the mortgage deal they are offering?

40 years is an unlikely term. The payment amounts suggests that it is a standard 25 year mortgage. Total amount repaid looks about right. Welcome to the world of mortgages!

Dougiedhu

Hi,
thanks for your reply. The HBOS deal is over 480 months. The house has to be bought under my mother in laws name, although I will be paying for it.

After 3 years the council cannot buy it back at at their discount price, but as we have no intention of moving is not an issue. It just seems stupid to me that we will end up paying 3 times the amount to the bank.

I am only going by what the bank have advised and have no knowledge of mortgages. However, if I bought a car for that price, which is possible (not by me though) , I would not be expect to pay that amount back.

I accept I am a novice at this, but it just seems a lot to pay back for this.

Dougiedhu

Sorry, I should have maybe mentioned that it is a Retirement plan for the mother in law.

I don't know if that makes a diference.

Cheers

Pal

If you bought a car using a loan at about 5% interest and paid it off over 40 years, you would end up paying three times as much for it. That is just how compound interest works.

Can you afford to pay more off the mortgage each month? If so, paying it off over 25 years (which is the norm) would cost you about £200 a month and would mean you pay a lot less in the long run.

I don't understand what you mean by a retirement plan? Where is your mother in law going to live? I take it that she will be living in the house for three years and then you are going to buy it off her? Is she going to pay you rent in the meantime as she will not longer have to pay rent to the council? Is she going to move out after three years?

What is the interest rate on the mortgage HBOS are offering?