Opinion and Advise on Mortgage

gibentrau

Hi all,

Firstly, I work for a bank and was just rejected a 100% mortgage. They are willing to give me 70% and a loan for the remaining 30%, but on the basis that i give them a cash deposit of other form of security for the bank.

So here is what im thinking of doing, my parents have an apartment which is worth £400k, so i've reached an agreement with my parents that they should sell the house to me for £160k, which i would only get 70% from my bank.

My parents will still live there but legally the house will be mine, with the 70% of £160k i can my an apartment as an investment which was my original plan, buy - to - let...

All i want to do is buy an apartment so i can rent and make some profit.. btw my parents were going to give me the house anyway for free within the next 5 years, but we saw this as a good chance to use the banks money to buy a house to rent, and since the bank will not give me the full amount i think this is the only way to go...

Opinions? Legally its ok, but not sure if its ethical..

Sorry for spelling mistakes

tonycottee

gibentrau wrote: »

Firstly, I work for a bank and was just rejected a 100% mortgage. They are willing to give me 70% and a loan for the remaining 30%, but on the basis that i give them a cash deposit of other form of security for the bank.

So they won't give you a 100% mortgage, but they will lend you 100% of value in the form of a mortgage and a loan. What's the difference? And surely if you need to give them a cash deposit you wouldn't be borrowing 100%?

It doesn't take much, but I'm slightly confused.

gibentrau

They will give me 70% of the asking price on mortgage for 35 years and the remaining 30% on a 10 year loan.

bill_creative

Gibentrau, you don't know Tobyemery by any chance do you?

I usually only read here to gain knowledge, but I am struck by the number of young people suddenly looking to get a BTL with no capital investment....

gibentrau

Coming straight out of Uni, there is no chance of i have any capital/security to offer the bank in return for 30% in loan.. friends who finished Uni 7 years ago managed to get 100% mortgages for BTL properties. But because of the current financial crisis the bank will not front 100%, so i think the only way of getting into the property market is by purchasing my parents for the amount stated...

btw dont know Tobymery..

Toby1990

I've got 16k. shh. But need 10k more to get a btl mortgage. hence me asking about a 10k loan.

7 years ago they was handing out mortages willy nilly as why we're in this situation now.

Toby Emery is me. I got told some naughty stuff from an advisor, that could of ruined my life. I've seen sense now though.

Lokolo

gibentrau wrote: »

Coming straight out of Uni, there is no chance of i have any capital/security to offer the bank in return for 30% in loan.. friends who finished Uni 7 years ago managed to get 100% mortgages for BTL properties. But because of the current financial crisis the bank will not front 100%, so i think the only way of getting into the property market is by purchasing my parents for the amount stated...

btw dont know Tobymery..

Or, get a job, save up, wait til house prices drop 10% then buy.

bill_creative

I read here as I was considering a BTL, but most of what I have learnt has made me consider alternative investments.

I'm pushing 40 and run my own business, so the time and management investment involved in being a LL make it an unattractive prospect atm, even aside from the financial investment.

If you get a 100% loan (by whatever means) how do you deal with maintenance and periods without tenants?

And btw it's partly BECAUSE 100% mortgages were being handed out to everyone a few years ago that there a financial crisis now!

Toby1990

Can you get this offer because you work for a bank, and do they know is it a BLT mortgage, usually they are are higher a residential mortgage. I've been told as high as 40%

Yorkie1

gibentrau wrote: »

Hi all,

Firstly, I work for a bank and was just rejected a 100% mortgage. They are willing to give me 70% and a loan for the remaining 30%, but on the basis that i give them a cash deposit of other form of security for the bank.

So here is what im thinking of doing, my parents have an apartment which is worth £400k, so i've reached an agreement with my parents that they should sell the house to me for £160k, which i would only get 70% from my bank.

My parents will still live there but legally the house will be mine, with the 70% of £160k i can my an apartment as an investment which was my original plan, buy - to - let...

All i want to do is buy an apartment so i can rent and make some profit.. btw my parents were going to give me the house anyway for free within the next 5 years, but we saw this as a good chance to use the banks money to buy a house to rent, and since the bank will not give me the full amount i think this is the only way to go...

Opinions? Legally its ok, but not sure if its ethical..

Let me just check the understanding here.

Your parents live in a house worth £400K. They sell it to you for £160K; you get a residential mortgage for £112k over 35 years and a loan for £48K over 10 years.

Your parents continue to live in the house but you do not do so?

You use the £160K to then fund a cash (?) purchase for a BTL apartment.

Who has advised you on the legality of this?

What age are your parents and have they had separate legal advice?

BitterAndTwisted

This is the craziest cunning dodge I've read all week. There are far too many obvious holes in this situation to waste time picking them all apart. Personally, I think your parents are certifiable if they think this scam is worth consideration