Taking on parents' mortgage to raise deposit

bigalroden

Hi, I hope someone can help me with this.

I want to buy a new-build house with my wife. We are able to borrow the amount we require, but our bank requires a 20% deposit for new-builds, instead of the usual 10%. (It's a staff mortgage deal which offers an excellent interest rate). We are around 25k short of the amount required, as we only have the profit we'll make on our current property to put towards it.

However, I have been asked by my parents to take on their mortgage, which has around 25k left on it, due to be repaid shortly as they had an interest-only deal. They are too old to take out a new deal and do not have enough in savings to pay the total, but they could pay me the monthly payments.

Firstly, how do I go about taking on what is left of their mortgage? Does the whole property need to be transfered to me or could I take on, say, a 10% share?

Secondly, is there any way I could perhaps take out a 50k mortgage on my parents' home and use the extra 25k to fill the shortfall in the deposit I would like to buy with my wife?

Thanks,

Alan.

Dave_Ham

Big Al,

You need to get some decent advice here, perhaps in a bit more detail than you will get on the forum.

Ultimately no, you cannot do this - pretty much any of it and not in the fashion provided.

You potentially have affordability issues and policy issues trying to take 2 residential mortgages. There are legal issues around assets being transferred that you also need legal advice for.

Ultimately, there is not necessarily a rack product we can pull of the shelves. Get a recommended broker to pull this together and use a recommended solicitor, or get the solicitor and recommended broker to tie it all up.

Either that or put your haggling boots on and get down to the new build place and upsell your offer...

Thrugelmir

As a first step I suggest you sit with your parents and work through their finances. The matter may well be far more complex than just taking on their mortgage.

Simon_gloster

bigalroden wrote: »

Hi, I hope someone can help me with this.

I want to buy a new-build house with my wife. We are able to borrow the amount we require, but our bank requires a 20% deposit for new-builds, instead of the usual 10%. (It's a staff mortgage deal which offers an excellent interest rate). We are around 25k short of the amount required, as we only have the profit we'll make on our current property to put towards it.

However, I have been asked by my parents to take on their mortgage, which has around 25k left on it, due to be repaid shortly as they had an interest-only deal. They are too old to take out a new deal and do not have enough in savings to pay the total, but they could pay me the monthly payments.

Firstly, how do I go about taking on what is left of their mortgage? Does the whole property need to be transfered to me or could I take on, say, a 10% share?

Secondly, is there any way I could perhaps take out a 50k mortgage on my parents' home and use the extra 25k to fill the shortfall in the deposit I would like to buy with my wife?

Thanks,

Alan.

If you took a £50k mortgage on your parents home, and they remaind there, some would class this as a 2nd home loan (close family with no tenancy agreement).

However you would have to add the £50k as a debt on your main res home, thu lowering the amount you could borrow on this and vice versa. Its a double edges sword.

Who is the lender?

bigalroden

Simon_gloster wrote: »

If you took a £50k mortgage on your parents home, and they remaind there, some would class this as a 2nd home loan (close family with no tenancy agreement).

However you would have to add the £50k as a debt on your main res home, thu lowering the amount you could borrow on this and vice versa. Its a double edges sword.

Who is the lender?

All sounds very complicated!! My parents' mortgage is with Santander and they live in England.

Our house is in Scotland and the lender is with Lloyds TSB through a staff mortgage.

Any other suggestions on how to raise approx £25k for our deposit???

beecher2

bigalroden wrote: »

All sounds very complicated!! My parents' mortgage is with Santander and they live in England.

Our house is in Scotland and the lender is with Lloyds TSB through a staff mortgage.

Any other suggestions on how to raise approx £25k for our deposit???

There's no way of raising the 25k other than saving, I'm afraid. Realistically you need to look at a cheaper property, or one which the lender will allow a 90% LTV.

Your parents need advice too as they need a plan to pay off the 25k they owe.