How can this work?? Urgent help required.

giggsy07

Hi guys,

I was wondering if anyone could shed some light on my situation?

I currently rent a flat with my girlfriend and we are also saving for a house deposit with about £20,000 saved so far.

My mum is in financial difficulty and our family home which is worth approx £200,000 has a remaining £90,000 mortgage on it. Therefore she has about £100,000 in equity but her credit rating is rock bottom and so would probably never be able to buy another house.

She wants to get her £100,000 out as soon as possible and is fed up with the house and the costs involved. She wants us to take over the house, i.e. the house be signed over to us and us to cover the remaining £90,000 mortgage payments, plus she wants us to give her the £100,000 equity she has. Therefore we would have the house and move in for £100,000 as opposed to paying a deposit and getting a mortgage.

Does anyone know of a way this could work and how we could get hold of £100,000 without so we could transfer it straight to her?

I can understand the benefit behind it but unfortunately I cannot think of how it would work to raise the finance, etc.???

Many thanks in advance.

Cissi

Rob a bank?

Seriously, you don't have the funds so you will need a mortgage in any case. Your mother wants £190k for the house, £90k to pay off her mortgage and £100k equity. You'd be looking for almost 90% mortgage - not ideal in the current climate.

Are you sure the house would really be worth this much on the open market? That may not be a given if it's been valued at "approx £200k" - are other, similar houses actually selling for this much? You also need to think about why you're trying to do this - are you mainly trying to help your mother, or does the house mean a lot to you and/or is it your dream house? What else could you get for the money (or ideally without stretching yourself quite so far)?

I would only contemplate this if it was truly a win-win situation, ie you got a house at a strongly discounted price. £190k for a house that *may* be worth £200k, in order to take a burden off someone's hands, doesn't sound like a great deal to me. You could end up stuck in a worse situation than where your mother is now, and surely she wouldn't want that either?

Annisele

A bit confused...does your mum want to give you the £100k equity, or not?

If she does want to gift the equity to you, then you and your girlfriend probably need a mortgage for £70k or so - you use your existing £20k plus a £70k mortgage of your own to repay your mother's lender. You can't just transfer a mortgage from one person to another; you need a new mortgage of your own to pay off your mother's loan.

If she doesn't want to gift the equity to you, then you and your girlfriend are effectively wanting to buy the house from your mother for £200k. In that case - assuming the lender's surveyor is happy that the property really is worth £200k, and assuming your income and credit ratings stack up for a £180k mortgage - then you get a new mortgage loan for £180k.

jamesperrett

As I understand it, the mortgage and the house have to be in the same names unless you jump through some fairly extensive legal hoops and have a very co-operative lender. If you are earning enough you could simply apply for an almost 90% mortgage for £170,000 and fund the rest from your savings.

James.

giggsy07

Thanks guys, I had more or less come to the same conclusion as you but just wanted to hear it from a 3rd party.

Basically my mum can't afford to stay in the house but wanted to try and find an easy way for us to get the house which is in a great location as our first property.

I am certain it would be worth £250-260k if we spent about £20k on it so we would need a £180k mortgage plus our 20% for my mum to be able to clear the mortgage and take out her £100k equity. Then we would need to hold for 12-18 months while we saved for the work on the house.

Will probably try to hold for a few months to increase deposit and then see if can get a mortgage.

climbgirl

Where is your Mum planning on living after shifting the house and mortgage to you? You've said she has a dreadful credit rating so she won't get another mortgage (and will find it hard to pass credit checks to rent a place). And presumably she wants the equity out to clear debt.

Is she planning on living there with you?!

Ulfar

climbgirl wrote: »

Where is your Mum planning on living after shifting the house and mortgage to you? You've said she has a dreadful credit rating so she won't get another mortgage (and will find it hard to pass credit checks to rent a place). And presumably she wants the equity out to clear debt.

Is she planning on living there with you?!

Ooh that is a recipe for disaster, it is also a case of someone wanting to have their cake and eat it.

If she is going to be staying then I would formalise it by drawing up a lodgers agreement and charging rent plus bills.

Surely it would be easier for your Mum to sell the house and downsize rather than off loading this huge debt onto you. So it will cost her some money. As others have said if she is going to rent somewhere else a poor credit rating will make that incredibly difficult.

G_M

Or is mum planning on making herself homeless, offloading the equity by paying off debts/giving to you, then getting the tax-payer to provide council housing and applying for benefits?

Unlikely to work as the system will define her as 'intentionally homeless'.

giggsy07

G_M wrote: »

Or is mum planning on making herself homeless, offloading the equity by paying off debts/giving to you, then getting the tax-payer to provide council housing and applying for benefits?

Unlikely to work as the system will define her as 'intentionally homeless'.

Not sure there is a any need for a reply like this is there?? Why are you suggesting my mum would do that? She works and pays tax like everyone else it is just that my dad !!!!!!ed off and left her in the lurch with bills and a mortgage that in the end she is struggling to afford.

If you are going to provide any adive then do so and don't jump to conclusions! Tw*t!

She will more than likely be looking to rent privately if she does sell the house and gets her £100k equity out from the sale. Her debts are not big at all - just the mortgage but it is the cash flow situation which means she is struggling to cover bills, mortgage, etc on a monthly basis. It may be that she has to provide a larger deposit or pay for a period upfront to the landlord which she will be able to do with the mulp sum.

It is then for her to get back on her feet without the burden of the mortgage.

evoke

Is the mortgage in her name now? If your dad's name is on the mortgage then he's liable for it too.

As her son why don't you just help her out for a while so she doesn't lose her home instead of trying to do a dodgy deal and buy it off her?

muskoka

Another option for mum is to sell the family home (unfortunate) and buy herself a smaller place, and gift you a deposit for a place? If the figures could stack up.