Mortgage on family's property?

Steakman

Hi guys, looking for some advice as to how i can obtain a mortgage for our situation:

We are sold stc and my parents were looking to downgrade from a 4 bed house to a bungalow, we've come up with an idea that all parties are happy with to build an extension, 'granny annex', whatever you want to call it adjoined at the back of there current property.

There house is mortgage free and worth around 280-300k, i'm also assuming that planning permission can be granted though obviously that could be a massive stumbling block. I should after all fees etc walk out with around 35k equity from our sale.

Parents are happy for us to go onto there deeds if that is possible or basically do anything to make this happen, the problem i see is that my father has recently closed his business down and neither parents work at the moment/ possibly not planning to.

Are there any mortgage lenders that would allow this kind of thing to go ahead? I'm potentially looking at a build cost of 40-60k, lump sum to parents 60k and money to furnish new house etc, so rough total of 150k including 35k equity from sale ( or just 115k if there's a way i can secure it against their property ).

As you can probably tell i'm a little clueless as to the ins and outs so any advice would be gratefully received! I'm just crossing my fingers there are possible avenues to not block this idea off before it's even started.

Many thanks

Dale.

whitewing

I don't know. My feeling is that it would be worth going for planning permission anyway - that may benefit the sale of your parents' house if it doesn't wk out for you.

This sounds like it may take a while to sort out anyway. Are you planning to stay at your parents when you move out of your house?

It sounds like you feel you need to get this all sorted out right now, but I think it doesn't need to be done straight awy?

Steakman

Hi Whitewing, thanks very much for your reply, the only accelerator is that my partner is expecting our 2nd child in august and we are currently in the process of selling our 2 bed house.

We are obviously looking at buying and renting as a contigency plan as all parties have said that it probably wouldn't be best sharing the same house to any lengthy term, though of course if we had to we could.

Kindly, my parents have offered to, if needed, be the ones to rent somewhere temporarily instead of us. Obviously i would then cover their rent.

That's a very good point on the planning permission and i couldn't agree with you more. My father has drawn up some basic plans and is speaking to someone he knows early this week to see what it may cost to apply.

It's not going to be a rush job but the less money wasted on rent the better. Obviously i'm going to try and approach some brokers to get advice too, I'm just trying to get a feel for what may be available to us, see if there's any obvious problems that my vague at best knowledge on these things would overlook or perhaps find someone who has been in a similar situation.

Thanks again.

whitewing

So you move into family home, which parents would still own?

You have a mortgage on the granny annexe, which they would live in?

You share the garden? Or are you portioning it out?

What are you looking for in terms of the granny annexe? Two bed? I can see things falling apart on a practical level if they still feel that they own a space in the house you are living in eg their guests come and stay in your spare room.

Steakman

Not exactly, we're looking to go halves on the whole property, i will just fund the build for the extension and put some money in their back pockets as i will be getting an extremely bigger house, so i'm just trying to cover the equity that they would get if they moved and bought a similar sized bungalow.

Everything would be separate apart from the double garage on the other side of the property which we can't do anything about for now. If i can explain it better then the 'extension' would be linked to the back side corner of the house via a internal door kitchen to kitchen, the land available to them then is 20mx10m, more than enough for a 2 bed bungalow and separate garden. Eventually we could partition from the edge of our kitchen past the brickwork of the new build and then fence to the bottom of the garden. We would have a garden of about 20x20m after the partition so there's enough space for everyone!

Our initial enquiries found that there's no way we would be able to build an entirely stand alone property within the current one so this would be the way to go.

No probs with the practical side of things, no share in the house, if they have guests they'll have to stay there! Everythings ok with that sort of thing, they're getting a tailor made bungalow effectively which they're more than happy with and they lose most of their running costs.

It's more the mortgage side of things i'm concerned about and whether i'll be able to obtain funding.

Sorry for the essays! Thanks again.

whitewing

Building your own home:

http://www.thisismoney.co.uk/mortgages-and-homes/article.html?in_article_id=409967&in_page_id=8

Self-build mortgages:

http://www.thisismoney.co.uk/self-build?expand=true#StartComments

Your situation is more complicated than this, but it may be a starting point. Looks like a chat with a broker who knows about self-builds would be an idea.

There must be other people on the forum who can add a bit of info, or just comment out of nosiness!

CLAPTON

I'm confused

you want to get a mortgage on a property for 115,000 which is currently worth 280-300K?
the ownership will be parents and yourself?
presumably your income is suffficent to meet the affordability criteria for the mortgage

why is that a problem?


it might of course be absolutely madness on other grounds but I can't see any issue with a mortgage

Steakman

whitewing wrote: »

There must be other people on the forum who can add a bit of info, or just comment out of nosiness!

Thanks mate, i'll take a look at those links.

CLAPTON wrote: »

I'm confused

you want to get a mortgage on a property for 115,000 which is currently worth 280-300K?
the ownership will be parents and yourself?
presumably your income is suffficent to meet the affordability criteria for the mortgage

why is that a problem?


it might of course be absolutely madness on other grounds but I can't see any issue with a mortgage

Sorry Clapton, not trying to confuse anyone, financially it should be fine, i've just never had any experience nor do i know anyone who has changed title deeds, plus if that were possible i'm not sure how lenders would look at one half of the property's owners being unemployed and 62. I can cover the costs i just don't know how it works, for example could my father sign to say he's happy for a mortgage to be applied to the whole value of the property, is it as simple as that?.

What other grounds do you mean mate? Living in each others pockets etc?

Just trying to gather information from much more experienced people than myself.

CLAPTON

if you can afford the mortgage on your own income then having several people on the mortgage (and on the deeds) isn't a problem (stay at home wifes are routinely on the mortgage and deeds of property with their husband)


other problems are legend- your parents are quite young 62?
suppose your parent want to move out and move elsewhere how would you be able to release any money to let them do this?
suppose one died and the other met some-one new and wanted some equity to move elsewhere?
suppose your own relationship broke down and your partner wanted some money
suppose you died etc etc

Steakman

CLAPTON wrote: »

if you can afford the mortgage on your own income then having several people on the mortgage (and on the deeds) isn't a problem (stay at home wifes are routinely on the mortgage and deeds of property with their husband)


other problems are legend- your parents are quite young 62?
suppose your parent want to move out and move elsewhere how would you be able to release any money to let them do this?
suppose one died and the other met some-one new and wanted some equity to move elsewhere?
suppose your own relationship broke down and your partner wanted some money
suppose you died etc etc

Thanks, those are some good points, part of the mortgage cost would be equity release for my parents + plus they have other savings pensions. They want to stay in this area, all our family are close, grandkids etc, they wanted to downsize but were having problems selling the house so this was one solution we came up with to benefit all concerned.

I guess for the other important points we would need to form legal documentation incase of relationship woes. Worst case of death would be covered by insurance premiums? Certainly alot to think about though.

Positive on the deeds.lending front though, that's what i wanted to hear