How to borrow £15,000? Mortgage I am a novice!

ludmilla

My mother (80 yr old widow) is the freeholder of a 3 floor house converted into flats. She has made over 2 of the flats to me. The remaining flat is hers and empty. One of the flats made over to me is rented out and the income from that is what she survives on. I am aware that until 7 years pass they are not totally mine. I do not have a mortgage. I do not have a job at the moment (living on dwindling savings), might have one in a month or two, but it will not be high flying at all. The rented flat brings in £920 per month which is my mothers pension. She lives in the country in a small cottage on a very low rent. She needs more income and a new car.

So, I was thinking if we could raise £15,000 (approx) I could buy her a newish car, and do up her flat and rent it out (£1,000 per month is normal rent for this area) and redecorate the flat she rents out and increase the rent which has not been raised for 5 years as it needs redecorating.

Could I release £15,000 from the equity. Could I take out a mortgage (I couldn't remortgage as it isn't mortgaged), Could the bank lend me the money - I am not really interesting to them, not having a job). What are my options?

PS. I have suggested we sell the flat she rents out (she doesn't want to sell her flat incase she needs to return to London when she is very old) but she is really against it, maybe it is a generational thing, she gets very angry and says what would she live on - I say £300,000 cash, but she thinks that is disgraceful).

Tixy

By made over do you mean she has gifted the flats to you? Has this been done legally - are you know they legal owner of them? If your mother is receiving the rent from one of them it sounds like it is her flat still legally.

If you have no job or income then you have virtually no chance of getting a mortgage even if you own them, as you have nothing with which to pay back the loan. How old are you? this will also affect your ability to get a mortgage even if you were earning.

ludmilla

she put them in my name, but the rent goes to her.

laurel7172

Reservation of benefit. If your mother is getting the rent from a flat you own, then she hasn't truly given it to you and the seven year rule for inheritance tax doesn't apply.

Also, I hope you don't mind my asking, but if you have no job and no income, are you on benefit? Because if you are, you could end up in quite a lot of trouble if you have two £300,000 flats, one rented out at £920/month, you haven't declared. I hope I'm not the bearer of bad tidings here...

laurel7172

Who is paying the tax on the rent? Because at over £10,000 a year and no mortgage to offset, the chances are somebody ought to be.

ludmilla

I'm not on benefit and my mother pays the income tax on the rent.

angel81

You would need to get a buy to let mortgage on the flat - I don't think you will have too much of a problem with the small LTV (loan to value) and high rent. You're best of talking to a local mortgage advisor about this

Also, why not rent out all three flats (or sell one and rent the other 2 out)? As long as your mother has 6 months notice before moving back to London you can always evict any tenants. If she is worried about having security (eg if her current accomodation evicted her), could you reassure her that she could live with you until a flat became available?

HTH

angel81

Sorry, one more thing. You might be better off posting this on the mortgages forum (or at least a thread with a link to this one)