Help Needed Please

MrsPitcher2b

Hello everyone

I am on here for my sister who needs some advice and i'm not very good with mortgages so thought i would ask you all.

She has found a house that she wants to live in, but it needs to be a cash buy - yes there is a problem with the house, but my dad can fix it, so once this has been fixed it will be mortgageable. (sp?)

My mum owns her own property with no mortgage, and another property with a mortgage (although only 100k where that house is worth 220k). My dad owns his own house with no mortgage but doesnt work now. (He is in construction and due to the job problems retired early - i think he's just lazy lol)

Basically my sister wanted to either 'buy' 50% and mortgage either my mums or dads property for the remaining cash needed, to buy the other house, or have my mum or dad remortgage for the funds.

Remortgage wise, i dont think my dad would get it as he doesnt work, although his house is around £300k and only £100k is needed, but obv no steady income, just odd jobs when he can be bothered.

Also, because my mum already has a mortgage (on another property) if she was to remortgage her house they would need to see proof that she could cover both mortgage repayments? Not sure if she can do this, and she is also worried that because she already has the mortgage they wont give her another. is that correct?

And im not sure how it would work with my sis buying 50% or whatever of my mums/dads because then surely they would need to see what my parents have then done with the lump sum of money, and then wouldnt my parents need to buy the house my sis wanted (not that that would be aproblem as they wouldnt kick her out - but not sure how it would affect them for owning an extra home?)

Anyway, if you have read all this thank you, and if you can see a solution it would be much appreciated. My sis has fallen for this house and has kind of given up right now so if there is any good news it would be appreciated!

Yorkie1

I am not an expert so I'll put my thoughts up for others to consider and comment upon.

You don't give any figures for the house your sister wants to buy - price, whether she has a deposit - nor for your sister's financial position. These details might affect comments in any event.

If your mum owns two properties, I assume one is her house - is the other rented out? I don't see a problem in principle with her speaking to a mortgage advisor to see whether she could either raise further funds on the currently mortgaged property or on the mortgage-free property. That being said, there will be questions regarding affordability.

For the rented house, the rent will need to cover the mortgage repayments, the interest rates will be higher than a residential property and I think maximum 75% loan to value. For the residential property, the lender would need details of how the loan will be repaid - i.e. that your mum has sufficient income to make the repayments both now and in the future when rates go up. You don't say whether your mum works or not. Your mum's credit worthiness (e.g. any historical or current debt) will of course also be relevant.

I can't see how your sister would be able to raise money herself on your parents' properties as she is not an owner of them.

Does your sister have any money to put towards her house, or is she totally reliant on your mum for the whole cash price?

Without wanting to know too many details of your family's finances, your mum and sister will need to consider whether there is to be a plan for her to repay the money from your mum. You mention reference to a mortgage on the property after the work is done on it - if this is part of the overall plan, then I would suggest that your sister makes suitable enquiries at this stage to satisfy herself as much as possible that a) a lender will lend to her (e.g. get an AIP), and b) the property will be mortgageable (depending on what works need doing, and what type of property it is).

If the plan includes your sister potentially paying rent to your mum, that opens up a whole new set of issues, such as the LL responsibilities which will be imposed on your mum, and the fact that housing benefit is often not paid where the LL / T are family related.

Hope this gives some food for thought for you, and something for others to comment upon / criticise as necessary!

MrsPitcher2b

Hi Yorkie

Thanks for your reply, sorry i forgot to mention all those details! My mum is living in her house which is worth around £250k, possibly a bit more. My brother is living in the other house which my mum is joint named on the mortgage - to help my brother get the house. This house is worth around 220-240k, mortgage value on the house was £130k when bought 2 years ago (over 15 years). So not sure how much is left there. My mum doesnt receive a rental income from this, my brother pays the mortgage - she was just named because my brothers partner has bad credit and wouldnt get the mortgage.

My sister has around 25k savings - possibly a bit more, the house is on the market for 135k so would need around 110k.

With regards to mortgaging my parents properties, my mum said about her buying half of my mums house. So my mum would sell her half the house so she could mortgage. Or my dad said they could do the same on his, remortgage his house with her salary. Im not sure how that would work though or if they could do that?

She would get the mortgage on her own no problem, its just getting it on that house before the work has been done thats the problem.

Thanks for yoru comments, i think she just needs to give up on it!

Yorkie1

I still can't see how your sister could possibly get a mortgage in her own name on either of your parents' properties, as she isn't an owner. Others may disagree.

As your father's income is unreliable or insufficient to get the cash through remortgaging his own property, the only way to raise the cash that I can see is for your mother to raise it on her own property (the unmortgaged one). Depending on her own level of income, I suspect (but am not sure) that the lender would want to be sure that she could repay both the new and the existing mortgage if need be.

What is the nature of the work needing doing? Is it structural underpinning type of work, or just without kitchen / bathroom etc?

apolotares

your solution as i see it, is to go see a lender, get a survey done. They may give you a mortgage in return for the work being carried out by a certain date. you see if you have a ''normal mortgage'' they can come and inspect the property and if work needs to be done to maintain its value, i.e. their security then they can order you to do it, or get it done. So I suppose they might mortgage it for you, but they may appoint a builder to do the work or a builder from some sort of approved list they have. And not allow your father to do it. Or they may simply inspect the work done. If you have sufficient equity in the property, this may be easier. I shouldnt think this is an unnusual occurance. Im sure their are products/remedies available.