Repaying mortgage off within months - impact on credit rating?

meanmachine_2

Any advice would be much appreciated:

A relative of mine is still living with his parents.

His father - close to retirement has been bitten by the property development bug (yawn) and wants to buy a place, do it up and sell it on within a few months.

Too old to get a mortgage, he wants his son to take on the debt, I guess in the form of a standard residential mortgage.

My question is whether the full repayment of a 25 yr mortgage (presumably it would have to be a lifetime tracker without an ERC) within months of it being taken out would have a negative impact on the son's credit rating going forward.

Cheers.

Robert_Sterling

Why would it ?

meanmachine_2

I don't know why.

Settlement of a long term loan within the first few months - I just thought banks might not take to that kind of thing, as they get no profit etc etc.

I guess I was mistaken.

Robert_Sterling

The person applying for the mortgage should be careful to ensure that they are are truthful when answering any questions the lender might ask. Failure to do so might in due course lead to a charge of obtaining a pecuniary advantge by deception.

chriz1000

Surely it would be better to put together a business plan, then approach the bank and be totally honest with exactly what you want to achieve. If it’s a good idea and you have done all the research the bank is likely to back you, as real estate is usually a no brainier as the loan can be secured against the property.

meanmachine_2

Robert_Sterling wrote:

The person applying for the mortgage should be careful to ensure that they are are truthful when answering any questions the lender might ask. Failure to do so might in due course lead to a charge of obtaining a pecuniary advantge by deception.

Yeah OK.

But the post makes clear that the relative is buying the home as their primary residence (they don't already own a home, they live with their parents) while it is being done up and then sold on. There's no deception as far as I can see. Or maybe I'm wrong - which is why I'm asking the question.

I just wondered whether, the next time my cousin comes to apply for a mortgage they'll face a higher interest rate because their credt history shows they settled a mortgage very early the last time.

Coupon-mad

Why too old to get a mortgage? :rolleyes:

meanmachine_2

Hi there

The dad is in their sixties, so I presumed would be unable to get a mortgage.

Basically I think it's a dumb idea- hard work, risky and no guarantee of making any money. But that kind of "doom mongering" is likely to fall on deaf ears, hence my interest in finding out whether the cousin's credit rating would be damaged by this venture. It's this which would put them off.

But it seems not from the replies so far.

Thanks to all.

Conrad

Will not affect credit rating at all due to repaying the debt.

Not fraudulent either. People are perfectly entitled to improve thier home and sell as and when they see fit.

As an investment - probably no good. Im a keen investor and one thing I note time and time again is people massively underestimate costs and forget to allow for loss of interest on captial employed, monthly mortgage costs and selling costs such as EAs fees.
I know people who have done this for a living for decades and even they now struggle to turn a profit. The smart money is investing abroad of course.

meanmachine_2

And this poor old boy in his 60s without much of a pension ( I gather) has never even done it before.

Must have seen it on'telly and thought it a right wheeze.

Oh, and their taste in interiors is straight out of the unfashionable 70s - chintz ahoy! So lawd knows how the place would end up, probably like something out of George and Mildred.

Joe_Bloggs

@meanmachine
I reckon it is an elaborate ruse to move their son onto the property ladder. I reckon they should engage you as a style guru.
J_B.