Mortgage or loan for buying flat

jeanniefaethecarse

We have the chance of buying the flat we live in, it belongs to my mother in law. The flat is actually worth around £150 000, but for all sorts of reasons I'm not going into right now because it's not relevant, we are being offered it for £50 000.

What I'm trying to work out (unsuccessfully) is, should we be thinking of raising a mortgage on the flat so as to pay her the £50 000, or would we be better off going with a loan secured or unsecured against the value of the flat. I want to get the debt paid off as quickly as possible, and pay as little as possible for borrowing the money.

Can anyone help with some suggestions?

ETA We both (finally) have excellent credit ratings, and our joint income is around £32000pa

Joe_Bloggs

Can you stay in the flat and save up £50,000 ? Do you have a deposit that proves your ability to manage money ? What is your credit record like ? Will it impress a potential mortgage lender ?
J_B.

jeanniefaethecarse

Thanks for replying Joe_Bloggs.
Yes, we're staying in the flat now, and can continue to stay in it. We have around 10000 saved up, and our credit records are both showing as excellent on credit expert. All credit cards/previous loans paid off regularly etc. and no existing debt.
The problem is the speed at which we need the money (or we would just stay in the flat and save and save). My Mother in law will be using the £50 000 from us to pay the overdraft she has in her business as the bank are threatening to foreclose on her. We just need some advice on the best way to proceed- a loan or a mortgage.

Joe_Bloggs

Apply for a mortgage then. It may save time if you use a broker to advise you and to chase things up when things are moving slowly.
J_B.

antrobus

jeanniefaethecarse wrote: »

.... My Mother in law will be using the £50 000 from us to pay the overdraft she has in her business as the bank are threatening to foreclose on her. ...

Foreclose on what exactly? Are you telling us that the flat is the security for the mother-in-law's business overdraft?

jeanniefaethecarse

It's a complicated situation antrobus. I asked for advice on this thread a while ago and have been saving since.
In short, her business has a £50 000 overdraft, secured against the shop property and the flat, both of which she owns, (it's all one building) and which are held in one deed. She has now spoken to her debt advisor at the bank and they have agreed to allow the deeds of the shop and flat to be split thus freeing the flat from being security on the shop overdraft, however it is on the understanding that once the flat deeds were in our name, we would pay off the £50 000 overdraft that mother has with the shop.

antrobus

jeanniefaethecarse wrote: »

It's a complicated situation antrobus. I asked for advice on this thread a while ago and have been saving since.
In short, her business has a £50 000 overdraft, secured against the shop property and the flat, both of which she owns, (it's all one building) and which are held in one deed. She has now spoken to her debt advisor at the bank and they have agreed to allow the deeds of the shop and flat to be split thus freeing the flat from being security on the shop overdraft, however it is on the understanding that once the flat deeds were in our name, we would pay off the £50 000 overdraft that mother has with the shop.

OK, that's fair enough. I was just asking on the basis that the bank which held the security would probably need to consent to the sale. Which they have, so no problem.

Then I'd say (as above) go see a broker. Or talk to your own bank or building society if you think you have a good relationship with them.

jeanniefaethecarse

Thank you both Joe_Bloggs and antrobus.