Mortgage transfer to parents house

Edmanet

Situation:
my wife and I bought a shared ownership property in 2008.
We were eager to get a house (we were living with my wifes family at the time) so we rushed into buying a 30% share of our house for £58,500 - total propert value £195,000. We mortgaged the full £58500

So we pay approx £350 PCM for the mortgage + £375 rent to the housing assosiation. Combined with the usual bills we barely break even each month. only getting by due to my wifes austerity (we visited our council for advice and we spend 75% less than the goverments expected average for grocerys and clothing etc)

We have since decided this is financial lunacy as we are only just breaking even and not being able to save to buy more shares. we are now in a fortuitous position where my parents have space to accomodate my wife and I + our 2 children so we can start again and try and get some serious savings together to buy a house outright.

Through research the house is now worth between £150,000 and £180,000 so we are most certainly now in negative equity.

We have an option where we can borrow the amount we will be in negative equity (between £5k and £12k) + the charge from our lender (£1.7k) for ending the agreement early through my parents at the current tracker rate. Meaning we will be spend the 1st year staying with them paying that loan back.

We have looked at the idea of making the arrangement more permanent - extending my parents house (loft conversion and garden room). So we are looking at ways we would be able to raise the money between my parents and my wife and I to fund the improvements to their property.

dimbo61

You cant buy a 15% share in your parents house and selling up and moving in with with your mum and dad will put a great strain on all involved

Conrad

Very confusing OP.

You imply you will lose £10k if you sell - so whatever you do this loss will be incurred, yes?

Adding yourselves to parents mortgage (which you must do if you want a share in the asset) will not be straightforward and will require full underwriting. Some lender do not allow 4 applicants.

Surely your parents will gift you your notional share whether your on the deeds or not? You say when the time comes you will get your share of the sale proceeds on parents house, so why bother being added to the deeds if your parents will gift you a share eventually?

I think you will end up selling, taking the £10k hit - which the lender will want immediately - otherwise you will be in breach of contract and end up with a bad credit record, and in the meantime save up for new home.

Many of us constantly warn about these shared ownership schemes but people always think we're being negative. .

Edmanet

My apologies for the badly written original post.

Put simply our situation is thus:

We bought a 30% share (£58,500) or a 2 bed house values at £195,000 - mortgaging the entire £58500. We are not gaining anything from the situation so are weighing up our options.

From initial research it looks as if our property is now worth between £150,000 and £180,000, meaning we are currently looking at losing anywhere up to £12000 + £1700 charge from our lender for ending the agreement early. To cover this we will borrow from my parents against their mortgage and spend the next 12 months using the money we will be saving from not running our own property (around £1400 pcm) to pay that loan back.

After this loan is paid of we will start saving for own property again.

The idea of transfering our mortgage to our parents house was one brewed out of desperation more than anything - we are simply trying to explore any way of minimising the amount of money we are inevitably going to lose.

CLAPTON

this makes absolutely no sense whatsoever

what do you mean continue to pay the mortgage? if you sell then the mortgage MUST be repaid although the mortgage company may provide an unsecured loan which will probably be a a higher rate of interest.

you won't have any money from the sale of your property... if fact you will have debts of 10,000 (the negative equity) and probabbly extra for the selling costs.
so there will be no money to 'invets' in your parents property.

I think you need to write some numbers down as what you are saying is unfortunately nonsense.

getmore4less

Can you sell to anyone or do the HA have a say on who buys it?

they could make it impossible to sell on especialy if they have new builds still to sell.

Edmanet

Clapton:

My apologies for the nonsensical OP. The suggestion is ludicrous. We were looking at ways we could borrow money to extend my parents house to make the living situation more permanent. We want to be in their area because the schools are better and both mine and my wifes family are within a 10minute radius.

We are trying to find ways of having to pay our lender back a lump some of upfront as we dont have the money. As it transpires I will be able to borrow from my parents against their mortgage at the current tracker rate to pay back our negative equity and spend the next year paying that back.

getmore4less

There are currently no shared ownership properties within a 20 mile radius of our home (whether this is good or bad remains to be seen).

We do have to go through the HA - but they currently have no housing stock in our county - essex, most of their stock is in Suffolk and Norfolk.