Complex: Can't even think of a title! Help!

Daelim

Hey everyone!

So, this is very complex and we are trying to think of a way to make this work out... here's the deal.

1. My aunt and uncle want to move to a bigger house. Thus, they must sell theirs to release equity for a deposit on their new place.

2. We want to buy it from them but due to work commitments can't obtain a mortgage (non resident for next 2 years)

What we talked about was doing the following:

1. Instead of them selling up, we give them the deposit they need for their new place in cash now and they keep the current house in their name too. They can rent it out or if that proves difficult we would give them the monthly mortgage payments. The mortgage is currently in my aunt's name and the new mortgage for the new place will be in my uncle's name only. Thus, I don't see any problems with them having both mortgages.

2. In 2 years when we move back home, we would give them the remaining balance left of their mortgage in cash and they would transfer the house into our name.

Result? We end up with a house mortgage free and they end up avoiding the hassle of marketing their property, solicitors and estate agent fees and all the other hassles of selling a house.

Would this idea even be worth exploring? Is it legal to do this? If so, what should our next steps be to finding out more information?

Thanks so much in advance!

chappers

Sounds fine providing they can raise the mortgage on their new property, just get something drawn up properly with regards to the money you give them on account.

Daelim

chappers wrote: »

Sounds fine providing they can raise the mortgage on their new property, just get something drawn up properly with regards to the money you give them on account.

Fantastic! So no issues in terms of the legality of doing this?

How would it work when we move back and pay them the remaining balance of their mortgage? Can they just pay it off in full (they don't have any early settlement charges) and then transfer the house to us?

Richard_Webster

You do need to trust each other and have the arrangement clearly documented as between you so that further down the track nobody can say "I thought we had agreed it work like this...."

Daelim

Richard_Webster wrote: »

You do need to trust each other and have the arrangement clearly documented as between you so that further down the track nobody can say "I thought we had agreed it work like this...."

Hey Richard, thanks for the reply. The trust is there but who knows what the future holds, eh? What would be the best way to make this all legally binding? I mean, what kind of document (s) should we have drawn up? Is it suffice to draw our own agreement up, sign it with witnesses and file it away in case of disagreement or should we do it through a lawyer?

Thanks so much!

ognum

Would they not become your landlord so need to change the mortgage to a buy to let and pay tax on any rental income you give them?

Beckyy

Mortgages are based on affordability, so there's nothing to say that they will defintiely get another. They would need to see an independant financial advisor.

Personally I would never, ever hand over that amount to an aunt/uncle without something legally written up. It only takes a fall out and they have your deposit and all the monthly payments you would have made to the mortgage, and two houses. It's a business contract, and you need to treat it as one unless you trust them 110%.

What I don't understand, is if you can afford to give them the reamining balance on their mortgage in cash in 2 years time, why you can't do it now? Do you mean take out a mortgage in 2 years time?

What would you do if house prices rise/fall between now and then, or your circumstances change and you no longer want it?

Daelim

Beckyy wrote: »

Mortgages are based on affordability, so there's nothing to say that they will defintiely get another. They would need to see an independant financial advisor.

Personally I would never, ever hand over that amount to an aunt/uncle without something legally written up. It only takes a fall out and they have your deposit and all the monthly payments you would have made to the mortgage, and two houses. It's a business contract, and you need to treat it as one unless you trust them 110%.

What I don't understand, is if you can afford to give them the reamining balance on their mortgage in cash in 2 years time, why you can't do it now? Do you mean take out a mortgage in 2 years time?

What would you do if house prices rise/fall between now and then, or your circumstances change and you no longer want it?

No, we will have the remaining balance in cash in 2 years time from saving. At the moment, we can afford their deposit with no problem and in 2 years we would have more that enough to pay them the difference in what's left on their mortgage minus the deposit we gave them.

Daelim

Beckyy wrote: »

Mortgages are based on affordability, so there's nothing to say that they will defintiely get another. They would need to see an independant financial advisor.

Personally I would never, ever hand over that amount to an aunt/uncle without something legally written up. It only takes a fall out and they have your deposit and all the monthly payments you would have made to the mortgage, and two houses. It's a business contract, and you need to treat it as one unless you trust them 110%.

What I don't understand, is if you can afford to give them the reamining balance on their mortgage in cash in 2 years time, why you can't do it now? Do you mean take out a mortgage in 2 years time?

What would you do if house prices rise/fall between now and then, or your circumstances change and you no longer want it?

Of course that stands to reason. But the current mortgage is in my Aunt's name and she is a housewife at the moment. By Uncle will thus have to be the sole applicant on the new mortgage. Thus, for all involved we would need to hope he gets accepted for a mortgage.

paddyrg

Daelim wrote: »

What would be the best way to make this all legally binding? I mean, what kind of document (s) should we have drawn up? Is it suffice to draw our own agreement up, sign it with witnesses and file it away in case of disagreement or should we do it through a lawyer?

You could do it yourselves if we were talking about a few hundred quid - as we're talking about much more, with all the complexities of a property sale, the usual delays, falters etc involved, absolutely go and see a lawyer.

Firstly, sit down and think of as many ways this could go wrong as possible (house valued lower by mortgage company, new place falls through, death, sickness, family split up, flood right in the middle of dealing, think of everything you can), then agree what you would do in each case. Do this in peacetime, it will save a lot of tears if things go wrong. Then take what you agreed to see a lawyer (or better still, each side to their own lawyer) and get it formalised

chappers

ognum wrote: »

Would they not become your landlord so need to change the mortgage to a buy to let and pay tax on any rental income you give them?

No they are just lending them some cash .

But it does bring up a good point if they then chose not to use that cash to reduce their mortgage what would you do if in 2 years time you found out you didn't have enough money to settle their mortgage and thus release the charge on the property.

Also is there no provision for an uplift/downturn in the value of the property.