Mortgage with parents, advice please

Debtgoing

Here's the situation, my parents currently live in spain and dont have any property here. They own a house in spain with no mortgage which they are going to sell and move back to the UK. It should sell for something like £250,000

They are going to want to buy over here again but are too old to get a mortgage and dont have enough to buy what they would need out right. So I am going to suggest to them that I get the mortgage and they pay the deposit then they can buy a 4 bedroom house and live in it.

My Mum wants to have students stay to bring in some extra cash so they'd need 1 or 2 spare rooms which can also double up as a room for me when I go home. I dont want my own place yet as i am moving around with my job and also plan to do a bit of travelling. I thought this would be a good oppotunity to help my parents and also get my name on a mortgage and on the property ladder.

I dont have any debt or savings, Im on £36000 p/a and am 26. The houses that I reckon they'd want to buy would be between £300k and £400k.

I know nothing about this sort of thing so im looking for some intial advice please. Like things to suggest, ways they can pay a deposit and ways we can work out how to pay the mortgage etc. Thanks!

beecher2

What will happen when you do want to buy somewhere for yourself? Your parents would need to sell up and downsize. There have been a few threads on here recently from people who are unable to get their own mortgages because they're on their parents' mortgage, so I'd think long and hard about it.

Seems daft to me to buy a 4 bed house and then rent out a couple of the rooms - don't get the logic when they could be mortgage free with a 2 bed house.

getmore4less

Try a different location where houses are cheaper

Debtgoing

I see. Yes you're right. I can see what you are saying about the 2 extra bed rooms.

well regardless of that, I dont think they'd be able to afford a a decent sized 2 bed place where they'd want it and they'd probably want to keep some of the money from the house back as the cost of living over here is more.

I dont think I will want to buy for ages so what about if I got a buy to let mortgage that they lent me the deposit for and I rented it to them? Would something like that work? Then it would kind of pay for itself and when I wanted to buy I could get a regular mortgage couldn't I? Or even get another buy to let..... hmmm, sorry Im kind of brainstorming here.

Debtgoing

getmore4less wrote: »

Try a different location where houses are cheaper

They want to live in a certain area for a reason so Im trying to help them do that.

herbiesjp

The deposit from your parents would have to be a gift and not lent, otherwise it would be treated just like any other commitment.

Conrad

Theoreticaly you can buy a house in your name with thier money and your own mortgage.

If they want to be on the property deeds, they MUST be named on the nmortgage deed, but this is where problems may come. Some lenders may entertain them though such as HSBC orf Halifax or thier own UK Bank.
If it were my parents though, I'd do it all in my name and get them to sort a separate legal agreement offering them some protection with regard the deposit money, but a mortgage lender may well want a signed piece of paper saying the cash is a gift to you so it's a delicate one.

Incidentally, if you do a mortgage in thier name, the amount loaned will be less where you state other people will live in the home as they will use ONLY your income in calculating the expenses such as food (for other people). They can only use parents income if they are on the mortgagem but as I sday it's problematic.

STEP ONE > see if they sell thier home. Spannish Banks are pretty much not lending now, so anyone buying thier property will face a wall of choice, many of which will be cheap repos. Furthermore they will likley have to be a cash buyer not needing a mortgage and there are less of these buyers around.
I bet you they find it far harder to sell than they expect. Be aware all people always say this "but my Spannish property is different and will sell easily". Ive heard it a thousand times!

getmore4less

Debtgoing wrote: »

they'd probably want to keep some of the money from the house back as the cost of living over here is more.

Thaat does not sound good,

If they can't manage on their income then using capital to support it is a very risky stratagy.

Debtgoing

My parents will be happy to gift me the deposit for the house and they wont be worried about being on the deeds so it sounds like the best way to do it would be for me just to get a buy to let mortgage and let the house to my parents. This keeps it all simple that way and I can choose to let the house to them cheaply right?

Debtgoing

Another scenario would be that i just buy a house with my own normal mortgage and a gift deposit from my parents then they live there and just pay money towards the mortgage. This would mean that I have the house and mortgage and could be renting where ever I want or need to.

If I ever want to buy we can worry about it at the time but whilst that house is there and my parents are in it i'd be happy to rent. Or if/when i meet someone I want to get a house with I can apply for a second but joint mortgage with that person.

koexelek

Debtgoing wrote: »

My parents will be happy to gift me the deposit for the house and they wont be worried about being on the deeds so it sounds like the best way to do it would be for me just to get a buy to let mortgage and let the house to my parents. This keeps it all simple that way and I can choose to let the house to them cheaply right?

Problem you have here though is, most lenders forbid you to rent your house to relatives with their buy to let deals.