House purchase dilemma

Stressedmummy12

Would really appreciate getting this off my chest!

I'm currently living in a rented property with my partner and 11 month old. We have come into some money recently (enough for a 10% deposit on a property we have seen). I really want this house. I saw it yesterday and is 5 minutes away from our rented house. The people selling want a quick sale (by end August for completion) and we are locked into our rental agreement until the end of November. I can't afford to pay rent and mortgage for 3 months. Could probably stomach it for a month.

I've thought that if we did buy it we could rent it out for 6 months but it seems like that option could be a bit if a headache as I would need to move back to my parents for 3 months (dont think you would find many people willing to rent for 3 months). Don't think there is really anyway out of the contract on our rented house. I do know that our landlord wants to sell this house at the end of our tenancy (we approached him about buying the rented house we are currently in) but he wanted silly money for it.

Any ideas?

BitterAndTwisted

Forget any notion of getting a residential mortgage and then being able to rent it out. That's not going to happen.

If your landlord has intimated that he's intending to sell the summer is a better time of year to do it than at the end of November. You have absolutely nothing lose by sounding him out.

n.b. You might really want this particular house but I'm certain that it won't ever be the only one.

girl_withno_name

I'd agree with the BitterAndTwisted - at least ask your landlord if he'd be willing to cut the tenancy short, if he wants to sell (and maybe you can be flexible in allowing viewings) then this plan may work for all?

marathonic

If you can't get out of your tenancy, I wouldn't worry too much about it.

Put the money in the bank and start saving. More houses will come along and if you can show bank statements with 3 months of savings, you'll have more mortgage options than if you just 'came into' the deposit money somehow.

Also, have you detucted money for solicitors, potential stamp duty, moving costs, etc. as these can't be added to the mortgage and may bring you above 90% LTV - causing more of a headache when trying to get approved for a mortgage.

My savings record hasn't been great over the past few months and I've recently submitted a mortgage application. I'm worried that the savings record in my last few months bank statements is the thing that will let me down.

girl_withno_name

marathonic wrote: »

Put the money in the bank and start saving. More houses will come along and if you can show bank statements with 3 months of savings, you'll have more mortgage options than if you just 'came into' the deposit money somehow.

Is this true? Maybe it depends on mortgage lender?
Our solicitors have asked where the deposit came from and to see proof that it's within a UK bank account, in one/both of our names... but our mortgage lender has only asked to see payslips I think

arbrighton

girl_withno_name wrote: »

Is this true? Maybe it depends on mortgage lender?
Our solicitors have asked where the deposit came from and to see proof that it's within a UK bank account, in one/both of our names... but our mortgage lender has only asked to see payslips I think

The solicitors have to do that for money laundering checks, nothing to do with your mortgage.

As I understand it, mortgage companies are concerned at the %deposit, not how you came by it. Why should it matter if someone left it to you?

marathonic

girl_withno_name wrote: »

Is this true? Maybe it depends on mortgage lender?
Our solicitors have asked where the deposit came from and to see proof that it's within a UK bank account, in one/both of our names... but our mortgage lender has only asked to see payslips I think

It must depend on lender....

My mortgage lender has asked for 3 months bank statements. As I don't bank with them, I had to request paper versions from my own bank.

During the application process, I said I'd drop the paper versions in (this has been done now) and he asked whether the statements would show my savings.

arbrighton

marathonic wrote: »

It must depend on lender....

My mortgage lender has asked for 3 months bank statements. As I don't bank with them, I had to request paper versions from my own bank.

During the application process, I said I'd drop the paper versions in (this has been done now) and he asked whether the statements would show my savings.

As in how much is in the bank as your deposit, I doubt they give a fig how it got there (within legal means).

BitterAndTwisted

In the bad old days, when the only mortgage-lenders were building societies you had to have been a regular saver with them for quite a long time before they would deign to consider you for a mortgage.

Perhaps those days are about to return? Coming in to a windfall doesn't prove that you are cautious or prudent

DVardysShadow

arbrighton wrote: »

... As I understand it, mortgage companies are concerned at the %deposit, not how you came by it. Why should it matter if someone left it to you?

If it is entirely inherited money, it tends to indicate a hand to mouth financial existence, which some people manage even on quite good salaries. This in turn is probably a risk indicator for lenders.

On the subject of looking good for a mortgage, Stressed mummy, do you have debts? If so, consider paying them off first. Often a debt knocks more than its own value off the money which a lender will consider you for borrowing.

DVardysShadow

Stressedmummy12 wrote: »

.... Any ideas?

1. Forget this house, save and look at property from the middle of September. The housing market often cools off at that time - and you may even find that the house you are thinking of now is still up for sale with a desperate seller - or it may be gone, but there will be other houses with desparate sellers hoping to move by Christmas.
2. See if your current landlord will let you out of your rental early in exchange for a few weeks rent.