Buy parents house. Help?

cookie78

I was wondering if anyone can help to see if this plan is possible and if anyone can see any problems. My partner and I have recently had a child and live in an apartment and would like to move into a house with a garden etc. My parents have come up with an idea that they would like to move to a smaller place and have identified somewhere that is ground floor small and perfect. So they suggested that we buy their house for the amount that they need to buy the place they are looking at. So the figures are:

The house they own is worth 140k
The place they want to buy is 95k
My wage is 24k going up to 25k in August.

They are happy to gift the deposit of 45k not just for me but for their grandson as they feel we would get more out of the property now with the garden etc. I was wondering if this gifted deposit is likely to cause any problems or if there is something I am missing?

kidmugsy

You want to borrow LTV £95k/£140k x 100% = 68%. That sounds OK. How confident can you be that the house will be valued at £140k?

You want to borrow a multiple of £95k/£25k = 3.8. That sounds as if it might be OK (but I am no expert). Is your partner likely to be earning again soon? Do either of you have any debts, or black marks on your credit records?

cookie78

Many thanks for reply. I used to have bad debts and indeed an IVA but this has all cleared years ago and there is no mention of it on any of my credit files which are all clean and I have had a few credit cards since which are all run fine. I would prefer to get this all in my own name if it was possible.

Dave_Ham

This is achievable (largely thanks to parental deposit) but you need to be very careful.

The IVA part of your history needs to be carefully planned and in conjunction with a lender that will accept family gifted deposit, on the the home purchase.

There are no pitfalls, unless your parents require care and then they need some regulated advice as to what this entails.

Do not entrust a large Estate Agent advisor to pull this together, or they may cause you grief...

Good luck

cookie78

Dave many thanks for your help. I note you state a mortgage company that accepts family gifted deposit, I assume that they all dont then? Is there any company in particular that you would recommend?

Dave_Ham

I cannot recommend I am afraid as nowhere near enough information, and do not want to give just names.

I would suggest you seek out a decent broker, or do a lot of research as the answers are pretty much in the public domain.

Some lenders will not accept the family gift, or will just make other parts hard work as they do not like it..

Good luck