mortgage advice possible?

Brodiebobs

After some guidence from the experts!

Our current mortgage is £76,000 we have consent to let from the provider, the amount we will receive in rent will cover the mortgage plus about £100 per month (maybe more). We earn £26,000 between myself and husband, have two children so get some tax credits + child benefit.

We have outgrown our house and have been looking to move for a while, my parents are looking to downsize and have given us first refusal on their house. Valued at £130,000, but they accept if it was on open market they would probably have to take less.

The problem lies that we have very little in the way of a deposit, and dont know if our income would stack up to borrow enough, and my husband has only just started a new job.

a) is there any way from the above figures a lender would consider us?
b) would there be any way round having no deposit i.e. parents allowing us to buy for less than value?
c) how long do you have to be in a job for a lender to consider it secure enough for a mortgage?

Thrugelmir

How much equity do you have in your current property?

Brodiebobs

Thrugelmir wrote: »

How much equity do you have in your current property?

not much, thats why we went down the consent to let route as we bought in 2007 at the peak and not much is selling where we live. We were going to rent ours out and move into rented ourselves until this oppertunity came up.

Thrugelmir

You'll struggle to obtain a mortgage for the amount you'd require to buy your parents house.

Finances are obviously very tight. However is there anyway you overpay your current mortgage. In order to start building up equity.

Have you factored in tax on any profit letting the property?

Letting on paper may seem attractive. However running a business is very different. Your tenant may not pay the rent. Evicting them takes time. How would you cope with the mortgage still to pay?

Brodiebobs

We have been overpaying since we got the mortgage, but we paid £95,000 in 2007 and next door sold just before christmas for £80,000 (so depressing!)

We have factored in if their be void periods and think we will be able to cope, the rental market where we are is quite strong and we have researched it. I also have a history in working in an accountants so can deal with the tax etc.

As i mentioned we were thinking of renting ourselves and would be looking at about £7-800 PM where as a mortgage would be alot less.

Brodiebobs

Any one have an idea what a lender would give us on our earnings?

poppy10_2

Without a deposit, and with little to no equity in your current property, you'll be unlikely to get a mortgage for your parents house

GMS

As you would be buying from your parents they could gift you the deposit meaning a sale at undervalue so no need for a deposit.

How much you could borrow would vary widely from lender to lender. A full assessment of your circumstances would need to ne done.

Have a chat with a broker to see if there is a way forward for you.

Brodiebobs

Thanks were going to see a broker, just wanted to float the idea here first as didnt want to waste their time (or have them laugh at us!)

GMS thats what my dad suggested but i didnt know if it was possible, he even suggested we get a mortgage and leave him named on it so he still owns a share?! He doesnt know much about finances but the guys at the golf club are all experts

They know they'd probabbly struggle to sell on open market as theres a few not moving on the street. Obviously i'll make sure its a fair price they want to sell to us!