Advice on mortgage plus extra cash

danser01

Hi All,

I am a mortgage newbie and need some advice on the below question:

I am currently living in rented accomaodation owned by my patners father. We get a good deal on the weekly rent (£100 p/w for a 3 bed house in a nice area).
The house is worth around £180k, but my partners father will generously sell it to us for around £90k as early inheritance (and he wants to pay of his mortgage).
I have debt of around £20k of which I pay about £400p/m.
The house could do with around £5-10k worth of work (needs new kitchen/new heating etc).

Question:
Is it possible to apply for a mortgage for say £120k so we can buy the house for £90k and have around £30k to pay of debt and a little left over for working on the house?

I know it is very situation dependent, but with the £400 p/m I pay rent, plus the £400 from the debt payments I would have £800 p/m to pay mortgage payments.

I'm sorry if this is a daft question - but everyone I have asked can't give me an answer.

Thanks in advance for any advice.

Radiantsoul

There are a few tax implications. Your partner's father may need to pay capital gains tax when the property is sold to you, and this will be based on the full market price. If he dies within 7 years of the transfer their may be an inheritance tax bill too.
In the event of your partner father being made bankrupt their is also a risk the £90k could be recovered for the benefit of creditors.

Overal it seems like a reasonable deal for you. Your best bet is to try and find a broker to help you. The fact that you have quite large debts might scare a lot of lenders off.

danser01

Thanks Radiantsoul - perhaps I could see if I could borrow a lump sum from my father (£10k or so) to reduce my debt with the intention of paying him back instead of the bank.

finnigan

We had a similar deal re buying a house 'under value', one thing you should check if I remember correctly is that the 90k is the 100% asking price, ie, you will need a deposit as 100% mortgages are generally not offered at the moment. You cannot use the equity still in the property as a deposit until you remortgage later on.

I hope it all works out ok.