Parents want to me a house! Help needed

howd

Hi Everyone,

I've recently made an offer on a new property and this has been accepted.

The problem is I have had historic problems with my credit report and have been declined from lending this extra cash from my existing lended Abbey.

Instead of going down the adverse lending route my parents would like to help me. The majority of my credit problems are coming from 2004 so they will be wiped clean at the end of this year. My intention is to but the house back from them next year.

The new house was accepted at £230K and I have a £60K deposit. How can they go about doing this? They bank with the Natwest and have no credit problems. They have no mortgage and my mum has her own business which turns over good profits.

Any advice would be appreciated. Which is their best option?

herbiesjp

They can simply purchase the property in their names, as a house for you to live in i.e. a second home.

Some lenders will be ok with this, others will not.

Once you have cleared up your credit history, will you have enough income to support the mortgage by yourself?

Horrified_Solicitor

herbiesjp wrote: »

They can simply purchase the property in their names, as a house for you to live in i.e. a second home.

Some lenders will be ok with this, others will not.

Once you have cleared up your credit history, will you have enough income to support the mortgage by yourself?

Simpler still is for you to buy the house jointly with your parents.

Conrad

Horrified_Solicitor wrote: »

Simpler still is for you to buy the house jointly with your parents.

Wont work as the lender would require the daughter on the deeds, hence also on the mortgage deeds, but her credit history would preclude such.

herbiesjp

Couldn't have said it better myself.

Having parents on the mortgage does not improve the credit history of the OP.

However, the OP has not given any details as to what the adverse credit is - so guidance on any other options are not possible at this stage.

Horrified_Solicitor

Conrad wrote: »

Wont work as the lender would require the daughter on the deeds, hence also on the mortgage deeds, but her credit history would preclude such.

Are you sure? The parents are ok and having a third person strengthens the covenant to repay rather than weakens it.

howd

Hi everyone,

Many thanks for your replies. My intention is to buy the house from them when I have a clear credit record next year. Myself and my wife have a joint income of £56K per annum so we will hopefully qualify for a first time buyer mortgage and get better rates.

They dont want me to pay rent, only buy from them next year. They are simply offering me a helping hand

herbiesjp

Horrified_Solicitor wrote: »

Are you sure? The parents are ok and having a third person strengthens the covenant to repay rather than weakens it.

But the 3rd person has adverse credit.

So will be classed as more risky - and therefore no mortgage I'm afraid for that person.

herbiesjp

howd wrote: »

Hi everyone,

Many thanks for your replies. My intention is to buy the house from them when I have a clear credit record next year. Myself and my wife have a joint income of £56K per annum so we will hopefully qualify for a first time buyer mortgage and get better rates.

They dont want me to pay rent, only buy from them next year. They are simply offering me a helping hand

Nothing wrong with that.

It should be straightforward with the right lender.

Conrad

Horrified_Solicitor wrote: »

Are you sure? The parents are ok and having a third person strengthens the covenant to repay rather than weakens it.

Positive. Well known principle in lending - the applicant with worst credit rating completely drives the whole application and all other considersations are secondary and completely made irrelevant where the credit would ordinarily fail the application regardless of how sound other applicants are.

Tis the same with those that tell me they can 'surely' borrow as they have £1m in equity, but a single default 3 years ago bars the deal.

getmore4less

howd wrote: »

Hi everyone,

Many thanks for your replies. My intention is to buy the house from them when I have a clear credit record next year. Myself and my wife have a joint income of £56K per annum so we will hopefully qualify for a first time buyer mortgage and get better rates.

They dont want me to pay rent, only buy from them next year. They are simply offering me a helping hand

This will involve 2 lots of stamp duty and a potential CGT bill if prices go up a lot.