2 mortgages?

in_need_ofhelp

Hi I need a little advice here quite quickly. My mum and uncle had a business which went under last year and this subsequently made my mum bankrupt last november. Her only asset is the house that she owns jointly with my dad and her trustee has given her a figure she must pay to buy back her half of the house. My uncle cant get the money and neither can my dad so the only option is me otherwise they lose their house.

My gran has a house that I'm going to buy for £55,000 so I've been to the bank and arranged a 95% mortgage of £52,500 for the property which is worth £100,000. She will then loan the money to my parents to pay the trustee so they dont lose their house. I still live at home with my parents but was hoping to move out next year with my boyfriend so basically my question is will I get a mortgage next year with my boyfriend to buy our own house when i already have a mortgage on my grans house????

Thrugelmir

Are you intending to rent your Gran's house out?

You need to be careful as you transfering an asset at under market value. This could potentially cause your a Gran an issue. Should your Gran require long term care in the future then deprivation of asset rules may affect her (and you).

in_need_ofhelp

No I wont be renting the house out as my gran will still be living in it paying all the bills etc other than the mortgage. My parents will be paying the mortgage but its in my name so I know ultimately its my debt in the eyes of the bank.

And no my gran wont be needing care in near future she is relatively healthy for her age.

GMS

in_need_ofhelp wrote: »

No I wont be renting the house out as my gran will still be living in it paying all the bills etc other than the mortgage. My parents will be paying the mortgage but its in my name so I know ultimately its my debt in the eyes of the bank.

And no my gran wont be needing care in near future she is relatively healthy for her age.

How have you managed to get a residential mortgage for a property you do not live in?

You will need to demonstrate affordability for 2 mortgages if you apply for another one. Even then there may be issues.

You cannot say for sure if your gran will need help or not. Hopefully she wont but things can change very quickly.

in_need_ofhelp

Im not sure i went to bank explained I was buying my grans house and that was the mortgage that was arranged. Find mortgages and everything involved with them confusing!

Consulted a mortage advisor who said next year i would just need to change the mortgage on my grans house to a buy to let and then get a residential mortgage for the property with my boyfriend that we would be living in. No idea if this is what can happen.

GMS

The bank may have taken a view on it as it is occupied by family.

A Buy to Let to rent to family could be an issue. I would advise you to get a Buy to Let mortgage in place for this before attempting to take on another.

Thrugelmir

in_need_ofhelp wrote: »

Consulted a mortage advisor who said next year i would just need to change the mortgage on my grans house to a buy to let and then get a residential mortgage for the property with my boyfriend that we would be living in. No idea if this is what can happen.

Then you would need to declare the rental income you receive from the property to the HMRC. Your parents paying the mortgage would be deemed as income in your hands.

in_need_ofhelp

I'm sorry if im coming across as dense here but my head is in a spin with everything but do you think if I went to the same bank next year and explained that I wanted to buy another property to live in but keep the 1st property as an investment they would accommadate me ie changing the mortgage from a residential to a buy to let? Then arrange a residential mortgage for the new property?

Thrugelmir

Why doesn't your mother remortgage her property? Seems the simplest solution.

in_need_ofhelp

We've explored every option for the past 10 months and this is the only one left. It's the last resort to be honest

Caz3121

in_need_ofhelp wrote: »

I'm sorry if im coming across as dense here but my head is in a spin with everything but do you think if I went to the same bank next year and explained that I wanted to buy another property to live in but keep the 1st property as an investment they would accommadate me ie changing the mortgage from a residential to a buy to let? Then arrange a residential mortgage for the new property?

BTL mortgages (if you want the mortgage to be excluded from counting) have criteria, one is LTV which you will be fine as this will be around 50% but the other part relates to rental in relation to mortgage payment so it must be (I think) around 125% of the mortgage. As said you will also need to declare this to HMRC and pay tax on the income