Buying my mums house

ctunni

My mums house is on the market for £119000 and she has a buyer interested. I would like to get on the property ladder and buy the house myself but I do not have a deposit and I am a first time buyer. After discussing this with my mother she said that if I can find £30,000 she would sign the house over to me and I can take up the remainder of the mortgage (I'm not sure if this can be done??). I have looked at personal loans of £30000 but they are all too expensive on the monthly repayments and the loan term is too short. I earn just under 29k per year and can easily afford the £545 mortgage repayments as I have rented property for more than this, the problem is how do I raise the 30k to buy her out without it costing me another £350 per month on top of the mortgage? I have made an appointment with my bank manager to discuss the options if there are any. Does anyone know of a possible solution/work around to this problem? In total I would be getting the house for £108,000, which is a pretty good deal these days. Suggestions/solutions/ideas/feedback welcome.

kingstreet

What does she actually WANT for the property and what is its actual market value?

Let's say it's worth £110k and she'll accept £90k. You can purchase it from her for £90k and have the difference as your deposit. The surveyor will value the property for the lender and it must be valued at the higher figure for it to work. This is only allowed when purchasing from a relative and it's known as purchase at undervalue.

Some lenders will accept it, some won't. A local independent or whole market broker should be able to help.

ctunni

There is about 78K outstanding on the mortgage so she wants 108K, the house was on the market for £137,000 but she has reduced it several times because of the current state of the market.

kingstreet

If it's on at £119k and she needs £108k it doesn't sound like there will be enough equity to gift you a deposit using an undervalue purchase. No idea whether a surveyor might value the property at the current £119k asking price. If he did, 10% deposit would mean your undervalue would be £107,100.

You could give it a try, but you'll be risking at least the valuation fee to do so...

ctunni

It's actually advertised at the estate agents for £126,500. She is moving to Canada and wants £30k from the sale to start a new life over there. We were trying to also avoid the 7k fee from her mortgage company for early repayment.

kingstreet

ctunni wrote: »

We were trying to also avoid the 7k fee from her mortgage company for early repayment.

How were you planning on doing that? The mortgage has to be paid off if she sells to you, or to anyone else.

£7k fee for a £78k mortgage? Are you sure? :eek:

ctunni

Yes its daylight robbery I know, but that is the case! Isn't there a way she can put me on the mortgage and I will pay it then eventually transfer it over to me?

kingstreet

ctunni wrote: »

Yes its daylight robbery I know, but that is the case! Isn't there a way she can put me on the mortgage and I will pay it then eventually transfer it over to me?

Possibly. Approach the lender and ask about a transfer of equity to include you on the mortgage and the deeds. It's not going to get you the £30k though. You'll have to remortgage to another lender to do that (equity permitting) and you might fall foul of the six month rule (no new mortgage on a property showing a change of ownership in the last six months).