I need some advice please re:my complicated circumstances

viccig

Hello everyone, this is my first post on this part of the forum.
I was hoping for some advice about myself and my partner and getting a mortgage.

My partner is currently going through bankruptcy and we rented for a while untill his mum bought a house as a second mortgage and she rents it to us (for the cost of the mortgage) The mortgage is, however interest only and I feel frustrated that I (with perfect credit history) could be paying off some of the balance to create equity in the property for when me and o/h eventually do take the mortgage over. We are paying approc £550 pm interest only over 16 years (mother in law is 47 and seems to think this is the longest term she can take mtg over)

To get to my point Im wondering if it would be possible for me and mil to take a capital and interest mtg together over a longer term (ie 25-30 yrs) to keep the payments about the same (can go up to £650) but be paying off my mortgage ready for when me and o/h take it over.
mil earnings are 25k and mine 8k as i only work part time.

I hope this makes sense and sorry for waffling if anyone can help I would appreciate it.

herbiesjp

What is the mortgage amount needed?

What is the property value?

MortgageMamma

could you not take the mortgage purely in your name with the MIL as guarantor?

viccig

What is the mortgage amount needed?

What is the property value?

property value = 115000
mtg amount =100000

could you not take the mortgage purely in your name with the MIL as guarantor?

I honestly don't know would that be possible on my wages and what companies would do that?

MortgageMamma

Do you get working tax credit? your MIL must be earning a decent wage and be nearly mortgage free to be able to buy a second property. Do you have potential to increase your earnings by much in future?

HelpWhereIcan

viccig wrote:

To get to my point Im wondering if it would be possible for me and mil to take a capital and interest mtg together over a longer term (ie 25-30 yrs) to keep the payments about the same (can go up to £650) but be paying off my mortgage ready for when me and o/h take it over.
mil earnings are 25k and mine 8k as i only work part time.

As mamma says, it may be possible to have MIL act as a guarantor for you, however most lenders offering guarantor mortgages will want to have evidence that there will be a point in the near future where you will be able to take the mortgage on using your income alone, so your options may be limited if you cannot show this (eg career progression). They are unlikely to accept that your OH will be joining you, unless their criteria allows for discharged bankrupts (which some do once they have been discharged for a year or two).

There will be lenders that will allow you to take the longer term as a joint mortgage, as you will obviously be working even when MIL retires. However, you will need to get advice to ensure that you are both aware of the potential consequences. The longest most lenders would agree for her alone is 17/18 years, although there are quite a few who will go beyond that (one goes to age 84!). The FSA is very hard on 'lending into retirement' so your adviser will need to make sure that they have explained all to you and investigated the options. IMO, the difference in cost between an 18 and a 25 year repayment mortgage need not be so prohibitive - depends on loan amount and available budget, but check that too.

Another alternative you may want to consider is making overpayments to the interest only mortgage. Depending on the mortgage and the amount of the overpayments, this can have the same effect as switching to repayment and could avoid the need to remortgage and switch lender.

Get some advice from a whole of market broker.

Hope this helps