First time buyers Mother and son - Advice Needed

tj130289

Hi I wonder if anyone can help me.

My mother has stayed in her 3 bed council house for over 20 years and has the right to buy with discounts for around £35,000.

I Currently rent my own flat with my wife and daughter.

My mum has been struggling recently with health and finances so my wife and I with our daughter have agreed to move back to my mums house.

To buy the house with the disount my mum must be on the mortgage either alone or jointly with a joint tennant.

She has no ccjs but does have a history of late payments recently and in the past.

I earn 27600 per year and have a good looking credit file with one late payment 4 years ago. the plan is to become joint tennant and get a joint mortgage with my mum and i will pay up the mortgage (at about £500 per month) and let her stay with us rent free.

Its not a big multiple of my wages but with my mums bad credit history does anyone think anyone will give us a mortgage?

Even if the intrest rate is high we will still benefit from the 50% discount on the buying price.

Do we have a chance? also We have 10% deposit at the moment will this be enough or should we wait untill we have more?

Any input is appreciated

Thanks

TJ

Conrad

Possibly someone like GE Money (yuk - often decline cases) might do this but they have to essentially prove the loan is sustainable and affordable. Can the household income support 4 people for example.

Furthermore if she's getting on a bit this will have implications on the max term allowed, which in turn affects affordability.

So without knowing masses of details about the 3 adults and the EXACT circumstances, dates and amounts of any late payments / defualts, it's hard to say.

Rent arrears will also have an impact once the case gets to the underwriters.

If you start telling a lender Mum has been ill - I'm not sure that would go down well as it implies things are up in the air / unstable.


Find a decent broker and go from there. Be prepared for a decline after 'agreement in principle'. In that case Mum has to prove her credit ability going forward, say for a year or so and then re - apply.

tj130289

Thanks for your reply

I should be more clear my mum is 53 and does not work. she recieves ESA because of her ostioperosis. i wouldnt say life threatning just struggles with heavy lifting.

My wife is a student and also brings no money in. We have no big outgoings in a normal month with no overtime we will have about 600 left over with our rent at £280 per month just now. so we will have more than enough to afford the mortgage of around £30,000

my wage can be as much as £35000 i was just stating basic salary.


I was purely trying to find out my chances and wether i was wasting my time trying to do it with my mother.

i could just buy on my own i just though it worked out well with my mothers house just want to know yes u have a tiny chance or no way dont waste your time

Thanks again

TJ

tj130289

Also just thought id add that i work for GE (Power Conversion) any chance this will improve my chances with them that i actually work for the same company?

Conrad

tj130289 wrote: »

I was purely trying to find out my chances and wether i was wasting my time trying to do it with my mother.


TJ

As I said, it's possible, but difficult, that was my answer.
Mum HAS to go on the mortgage even as a non working person. A mortgage is a deed that allows the lender to transfer ownership to them from ALL owners which thus allows them to repossess if they don't pay the mortgage.

So Mums situation will be taken into account regardless of her not working. She has to be a joint mortgage applicant.

As to overall affordability, it will depend if the lender includes Mum as an expense - a draw on your income, which they probably will.

So in summary - do you have a chance, yes, but it's probably less than 50/50.

The only way you will know is by actually applying.

Your working for GE will have zero impact as FSA rules would deem such a reilance as inapproriate and a meaningless irrelevance in terms of a lender discharging it's regulatory duty to lend responsibly.

tj130289

Thanks conrad.

TJ

Senior_Paper_Monitor

I don't think GEMoney fiannce Right to Buy (I'll be honest - I haven't actually asked them but I don't think so - I'm just checking with them as I missed them from our research when we set up an RTB operation earlier this year).

Before anyone can 'go on the tenancy' most councils require them to prove they have lived there for a year (not all but most).

So until then you won't be able go on a mortgage with (or without) your mum. Once there are two (or more) people on the tenancy, then it isrelatively easy for one party to not exercise their right and permit the other tenants to proceed with purchase (the implications of this are of course considerable - and when handling this sort of application we insist on independent legal advice being given to the surrendering tenant).

Working for GE will make absolutely no difference.

Certainly a complicated case and one that needs to be treated with extreme caution on multiple counts.

As Conrad states - lenders are neurotic about rental records on RTB applications (understandably). The existence of 3? dependents will make affordability difficult.

One important question - what is the benefit to your Mum in purchasing ? She has a low cost (presumably covered by benefits in part or total) home for life - exercise Right to Buy and there is a danger of her losing it under a number of circumstances.

tj130289

Hi i have an agreement with my council (South Ayrshire) that i am giving up my council flat and can become joint tennant with my mother at her house straight away.

she has worked on and off over the last few years and when working has built up arrars on the rent. as soon as i move in i will be paying it all off as there must be no arrears when asking for a valuation through right to buy in scotland.

Benefit to me and my mum purchasing her house is alot to do with it being the house i grew up in.

It will make no diffrence to her financialy as her benefits cover everything but she will benefit from us staying with her in the future and (Touch Wood) when she is gone i will have a house to live in or leave to my daughter that she will not have to pay for.

The discount is also a big thing as i will be able to pay it off reasonably quick - no more than 10 years and its in the family for whoever needs it.

It is a complex case i know should i take all this info to a broker and see what they can do sorry i dont know much about this stuff

Thanks for everyones help keep it coming

TJ

Senior_Paper_Monitor

OK - you didn't mention your current accommodation being council (and not all councils will allow the transfer in that way).

I have just spoken ith GE Money and can confirm they won't touch Right to Buy .

As you have identified yourself - you are going to need a broker (preferably one who has Right to Buy experience) and they are going to have to work through your files with you and come up with 'a plan' - I doubt this is going to be an immediate solution

Dave_Ham

You have clearly done a lot of the hard yards yourself, in relation to being immediately added to the tenancy.

Before you do or think about anything further, we need to know what your Mums credit file looks like and not just guesses.

Pay £2 to Experian and Equifax and then tell us, or a suitably experienced broker exactly what is on there. This will determine the potential solutions.

Naming lenders like GE at this stage of the process given the information provided is at best naive and at worst negligent.

Get the exact information and then you will be able to receive better information, on or offline.

All the best.

tj130289

ok sounds like a plan there is no rush anyway we can continue renting untill we either get a mortgae or we save the amount to buy it outright.

thanks for input i will post with any progress i make.

TJ