complicated one..

nzmegs

My husband and I have a joint mortgage and around £10,000 equity on our house. I have a buy to let mortgage in my name only with around £50,000 equity. This mortgage is in my name but is paid for by my MIL, it was her deposit and she lives there. We get no income from this rent.

We are thinking that next year our MIL might need/want to live with us. Tghs would mean buying a much larger house. But we don't know how much of a mortgage we could get between the three of us assuming we sell "her" property and ours.

This is how things stand rihgt now.

MIL, aged 55 earns around £20,000
Husband - self employed earns around £15,000
Me - self employed earn around £12,000

We also have £18,000 debt.

Questions: would MIL get a mortgage (even joint with us) at her age?
Would we be able to get a new mortgage given our income and debt? (this is the income after expenses - the turnover is twice this)
How would the property be split and what happens when she retires or dies?

is this even a good idea?

Looking at the figures it looks pretty hopeless to me. I can't see us getting much more than £200,000 together which is not enough. We need at least £300,000 for the size home we will need.

Any thoughts on any other options? MIL finds it hard living alone.

nzmegs

Added:
Despite our income we have no trouble paying our mortgage and bills and have a very good credit rating. Just the self employed bit which is troubling me.

SimbaSimon

nzmegs wrote: »

My husband and I have a joint mortgage and around £10,000 equity on our house. I have a buy to let mortgage in my name only with around £50,000 equity. This mortgage is in my name but is paid for by my MIL, it was her deposit and she lives there. We get no income from this rent.

We are thinking that next year our MIL might need/want to live with us. Tghs would mean buying a much larger house. But we don't know how much of a mortgage we could get between the three of us assuming we sell "her" property and ours.

This is how things stand rihgt now.

MIL, aged 55 earns around £20,000
Husband - self employed earns around £15,000
Me - self employed earn around £12,000

We also have £18,000 debt.

Questions: would MIL get a mortgage (even joint with us) at her age?
Would we be able to get a new mortgage given our income and debt? (this is the income after expenses - the turnover is twice this)
How would the property be split and what happens when she retires or dies?

is this even a good idea?

Looking at the figures it looks pretty hopeless to me. I can't see us getting much more than £200,000 together which is not enough. We need at least £300,000 for the size home we will need.

Any thoughts on any other options? MIL finds it hard living alone.

I'm no expert but I'll add my comments!

The debt would restrict what you could borrow so you'd need to pay that off first. So if you sold the BTL and got 50k back from it you'd need to use 18k of this to get rid of your debt. Leaving you with 32k to use as a deposit and 10k of equity which you could also use (presuming your house is worth at least the same of what it was before). So lets say 40k deposit and a couple of grand of fees. If you took all your combined incomes you'd have 47k a year free before tax. On a 300k property with the deposit you'd need to borrow 260k, or 5.53 x your combined incomes which I doubt lenders would stretch to.

getmore4less

When did the £18k debt start building up, is it going down now?

CLAPTON

you need to see an independent mortgage advisor as your situaion is a little uncommon

Depending upon the details, presumably you are aware that when the BLT is sold you may be liable to capital gains tax (depending upon selling/buying price)
and you should be declaring your rental income and potentially paying tax on any profit.

nzmegs

The debt has been around for a few years, from when the self employment started - set up costs etc. it is going down, but slowley...very slowley!

The rental doesn't provide any income and there is no profit. I am aware we will need to pay captial gains. But we have spent quite a bit on the property so should be able to offset some.

I think an IFA is the best bet as it is complicated. We might just have to wait a few more years.

Many thanks for your thoughts

getmore4less

How big are the current borrowings on the 2 places

Is the new borrowing going to be larger?

If you are struggling to pay down the £18k debt now then borrowing more is not a sensible idea even if the MIL could up her contribution.