Will it work?

Alex1976

Would really appreciate some help on this one...
Myself and my wife currently own a £240,000 house with a 138,000 fixed rate mortgage (pay about 500 pcm) that ends in September 2011.
We want to buy a £325,000 house and switch to a buy to let mortgage on my existing house (returns 900 pcm).
My mum (aged 68) might be looking for an investment flat. I owe her a little bit of money anyway and am offering her 50% of my house for £100,000.
My intention is to put this down as a deposit on my new house and split the rent between us on the buy to let. She then gets a good return on her 100k; has made an immediate profit (50% share in a 240k house) and helped me buy a new home.
I’m having problems working out the best way to do it and am not even sure if it’s possible.
My mum (quite rightly) would need assurance that she owns 50% of my house and thus have her name on the deeds, but for this to happen also needs her name added onto the mortgage. The problem her age at 68 and can’t have a mortgage when reaches 75, she can prove that will have funds available to pay it off when hits 75 so getting the mortgage is not a problem but will not want to use her money to do this. So then what, sell?
Alternatively she loans me 100K to put down as a deposit on our new home but can we have a contract between us that she is entitled to 40%-50% of rent and receives 50% of value on the buy to let if/when sold without adding her name to deeds and mortgage? Would I need to tell lender about this and will it affect borrowing on the new house.
Any suggestions would be great...

GMS

Max age on a Buy to Let can often be over 75 as the mortgage is self sufficient. That may help cover one problem. You would need to remortgage to a Buy to Let for your current property with your mother being party to the mortgage. That way she has assurances that she owns half. You and your wife could have 25% each if necessary.

The 100k your mother uses to by in to the property could then be used as a deposit on your next purchase.

May be best speaking to a 'Whole of Market' broker.

herbiesjp

BTLs have diffrent criteria.

You can find lenders happy with your mother on the mortgage/deeds - transfer of equity costs will apply.

getmore4less

£450pm(is that gross or net) on £100k is 5.4% .

Whats it likely to be after costs, voids, repairs etc. 2%-3%?

She might be better of with cash ISAs and still have access to her £100k for spending.

68 might be a bit old for property speculation she is unlikely to ever get the benifit.

On the other hand potentialy a nice litle earner for you!

Alex1976

Thanks for your help so far; i am tied in until Spetember 2011 although current lender have confirmed criteria is good enough to switch to buy to let. Yes there might be ongoing costs with a tenant however that would apply with any property investment. I will not be profiting and the extra rent will pay the mortgage. I will be borrowing to the max on new house even using the 100k deposit; if i do this not sure how it will affect my borrowing affordability. The lender has said that because buy to let would be sufficient wont affect it although not sure what transfer of equity costs might be and this affects anything.