Mortgage for Son to Rent House

mumcoll

Our mortgage is paid off (house worth about £170k) and we have a small amount of savings. Between us we earn £32k and are in our mid 50's.

Our son and his wife both have temporary contract jobs so are unable to get a mortgage. We are thinking of buying a house for them to rent from us, with a view to buying when they DO have permanent jobs. (Both have long term temporary contracts).

Does anyone have any advice as to if this would be viable and if we could get a mortgage on this basis?

Thanks very much!

Wh05apk

You could either remortgage your existing property, and purchase the new one for cash, or get a "regulated" buy to let on the new one (or any combination of both), rates/fees/terms will be much better remortgaging yours.

Simon_gloster

Good info above......2nd homes will also carr a maximum of 75%, therefore a deposit from you will be needed. If you do remortgage your home it could he paid in cash if the purchase price is below £130k ish.

The term you want will also be restricted due to your age therefore costing more than a 30-35 yr term.

sleepless_saver

Before you do it, have a look at this thread. The parents remortgaged their mortgage free home to buy a house for their son. Due to completely unexpected job loss, they had to claim benefits. They found that due to having two houses they were not eligible for any income related benefit.

mumcoll

Thank you all for your advice, I hadn't even thought about benefits - hope we never need them but you just don't know.

Thanks again!

Wh05apk

Simon_gloster wrote: »

Good info above......2nd homes will also carr a maximum of 75%, therefore a deposit from you will be needed. If you do remortgage your home it could he paid in cash if the purchase price is below £130k ish.

The term you want will also be restricted due to your age therefore costing more than a 30-35 yr term.

75% with who?

Woolwich 90%
Nationwide 85%
Abbey 80%

Some may have 75% max, but easy enough to avoid them.

Simon_gloster

"WILL" not all. Link please to barclays criteria Wh on 90% 2nd homes as I cannot access them. Cheers.

getmore4less

think it through

why won't people lend to them?

Continuity of their income does not fit the criteria and is a higher risk(subjective) than proper jobs.

general rule with family and freinds, don't lend any more than you would gift.


Why do they need to buy a house?

With contract jobs that might need mobility buying is the last thing you want to do.

Wh05apk

Simon_gloster wrote: »

"WILL" not all. Link please to barclays criteria Wh on 90% 2nd homes as I cannot access them. Cheers.

Woolwich current criteria shows 85%, however that is not upto date, they will allow 90% (subject to product) since last October, as confirmed by an underwriter earlier this week.

Yorkie1

If the OP goes down the BTL route, won't that mean a limited pool of lenders which will lend, because the tenant is related to the owner / LL?