Buying a house with help from my Parents??

rachelmole

Hello

I am 24 years old and desperate to get on the property ladder, my parents have offered to help but I'm after some advise/experiances to know if I'm doing the right thing. Here's the situation:
I'm 24 years old with a gross salary of £19,000. Take home pay is around £1250 a month. I pay £240 HP on my car, £35 on my phone bill and £260 a month on fuel. this means i have about £535 of out goings a month, leaving me with a surplus of £715. Having rented in the past my savings have depleted to zero hence why I am now living back with my parents.

My parents are farmers and have a sizable turnover through their business account, they also have two mortgages on pieces of land but own the farm/farm house outright. They will in the future be leaving the farm to my brothers and moving somewhere else, probably taking out a mortgage to buy somewhere again using their business account. This won’t be for another 7/8 years or so.

We have seen a house that is ideal and is on the market for £89995 (it’s been on a while, I would like to think they would take £85,000 but not sure).

My parents have offered to help me significantly but I don’t want to take advantage of them or ruin their chances of buying somewhere for themselves in future years.

They have proposed that they put down a deposit of £15,000 but in my name and then we have a joint mortgage after that with them paying what I can’t afford. Having never had a mortgage before I don’t know what the monthly repayments would be on this sort of amount but I think I could probably handle repayments of about £300 a month.

I just wondered did any body have any advice or tips about which lenders would be good to see/had anybody got an arrangement with their parents like this and had it worked out etc.

Any comments would be greatly appreciated.

Thanks

Rach

Greenhalgh

If you struggled to rent in the past, it would be advisable to see where the downfall was there.
Was the cost of rent unmanageably high?

It would be wise to learn from the previous here as you will have a lot more on your plate with buying.
You will be forking out for repairs and insurance and whatnot.

Have you been saving a lot while living back with your parents?
There is a great feeling of pride when you manage to get the deposit together all on your own.
It will put you in good stead for the future, knowing that you can do it.

You have very generous parents who obviously love their daughter very much.

rachelmole

Thanks for your reply

When I was renting I was on £14,000 and paying £400 a month rent, I didn’t pay so much on fuel then as work was only 20mins away. I have since moved jobs and now commute 108 miles round trip taken a big wage leap as you can see. Due to my family situation I cannot move any further from my parents and therefore the fuel bill will remain. I’ve only been back at my mum and dads for a month as we all agreed that whilst I was paying £400 rent and £260 a month fuel to get to my new job there was no way I was going to be able to save to save anything.
I could now save £300 a month which will mean it will take me 4 and a bit years to save a reasonable deposit. As much as my parents love me I’m not sure they want me at home for that long, (I have two older brothers who work on the family farm who they are trying to move out as we speak!) and buying somewhere has been their idea.
I would love to achieve this by myself and yet I don’t want to be the only child left at home when my mum and dad are just planning on slowing down.
I suppose I struggle with knowing does it make me a bad person or spoilt if I accept my parents generosity or should I tell them that they’ve got a child in the house for another 4 years?
More of a soul searching question than financial advice!

holly_hobby

If you and your parents want to be on a joint mortgage together, than their income which will be proven by 2 to 3 yrs accounts, must support all other borrowings as well as the new proposed mge with yourself.

Should a lender be agreeable to the whole situation - then upon your sale of the property (as this is not your parents main residence) they will be subject to capital gains tax (less any remaining annual allowance at the time of sale) on their share of any gain realised on the sale of the property.

If the property is sold in negative equity - how/who will pay meet the outstanding balancea reqd by the lender.

Furthermore, there will be mge product and legal fees in association with the initial purchase - who will pay these?

You and your parents also need to be aware that all parties are jointly and severly (singularly) liable for the whole debt and monthly repayments - so if one party can't provide their share the other will need to meet this themselves.

You need to also discuss what will happen if either you or your parents wish to be removed from the deeds & mge.

These are just a few of the serious considerations that you and your parents need to make before jumping into this one.

Err on the side of caution ..

Hope this helps
Holly