Parents get another mortgage?

tricklesthegreek

My dad is 60 and mum is 58. She earns 19k a year, he work part time and earns about 8k as he has just returned to work after an op on his spine.
Their equity is about 45k in their house.
We are struggling to get a mortgage deposit together and as I'm an ex BR that makes me a bit of a no go so asking them to release their equity wouldn't really be any use I guess.
Anyone know what it would be like if my parents bought a house and effectively became our landlords? Get sick of paying agency fees, getting stressed if we sneeze in the house in case we damage something, not being able to make it our own. Don't know if their age is against them.

Werdnal

They would need a BTL mortgage, with minimum 25% deposit, and their ages may cause concern for lenders.

Some BTL loans specifically prohibit letting to family.

tricklesthegreek

I've heard on the grapevine that BTL mortgages don't exist anymore?
Could they not get an interest only, or even a straight forward mortgage and purchase it outright then we effectively just pay the mortgage? Am aware their ages may be a problem which is a gamble that may have to be taken.

Fire_Fox

Please run an advanced search, this issue has come up many times in the last month alone.

If you cannot afford to save a deposit plus costs of buying plus three months mortgage payments in case of emergency you cannot afford to be a homeowner. Do you know where every last tenner of your income goes every month? Have you read around MSE and tried some of the crazy live on next to nothing challenges? Do you really need a house, could you downsize? You are only two and a half years out of bankruptcy so you probably have loads of late/ missed/ defaults on your credit file, obviously also have not been saving that long and according to your other threads your partner has recently been unemployed.

Why would you want your parents to take on another mortgage when they will soon be able to retire? Why would you want your father to have two huge debts when he has health problems which may render him unable to work? If he needs to claim means tested benefits anything you pay him will count as income. Most lenders will not offer BTL mortgage for letting to family. Also if you ever need to claim housing benefit the tenancy may be deemed to be a 'contrived tenancy' such that you will be turned down.

Gamble?? Sorry to be blunt but has it occurred to you that being impatient, living outside your means or failing to plan for changes in circumstances was part of the reason you got into financial difficulties? And now you are thinking of asking your parents to overstretch financially taking the same risks as you did?

tricklesthegreek

Blimey, it was only a question - not expecting a full blown judgement and screaming match!!
For the record, it's not about us WANTING to live outside our means. Just merely looking to see if owning a house would be better off for us than renting because at the moment mortgages seem to be cheaper than renting around here.
And also, for the record, it was THEIR suggestion in the first place as they don't like seeing us rent, THEY are the ones wanting us to buy while the market is seemingly cheaper!!
A ten percent deposit around here would be about £16k which once my husband is working would take us about 3 years to save which I am fine with, it's a discussion my parents and I have had as they are convinced we should own a property as soon as possible. Yes I'd rather we owned our own house for the reasons I said in the OP, but if you seriously think that I am the kind of person that would want to put my parents at risk then, well, actually you don't know me anyway so of course you wouldn't know that.

And I must say, out of everyone that I know that owns a property, I think only one of them has three months mortgage payments saved up. It's a good idea though. Maybe they should make that a rule before people can take out a mortgage so it's in a protective scheme or something so then if people do get in the shtuck then it can be called upon, and if they sell their house then it's automatically released back to them.

Mojisola

tricklesthegreek wrote: »

My dad is 60 and mum is 58. She earns 19k a year, he work part time and earns about 8k as he has just returned to work after an op on his spine.

Considering their ages and health, it would be risky for them to try to help you, although I can understand them wanting to see you in your own property.

There are just so many ways it could go wrong - even if they were able to get a mortgage - that I don't think they should try.

tricklesthegreek

fair enough. I think so too to be honest. Just frightens me that rents are climbing and there's no sort of cap on it. wouldn't mind if we had a decent landlord but everything with this house seems to be a battle!! My parents just thought them being our landlords would make things easier for all concerned.

Fire_Fox

tricklesthegreek wrote: »

Blimey, it was only a question - not expecting a full blown judgement and screaming match!!
For the record, it's not about us WANTING to live outside our means. Just merely looking to see if owning a house would be better off for us than renting because at the moment mortgages seem to be cheaper than renting around here.
And also, for the record, it was THEIR suggestion in the first place as they don't like seeing us rent, THEY are the ones wanting us to buy while the market is seemingly cheaper!!
A ten percent deposit around here would be about £16k which once my husband is working would take us about 3 years to save which I am fine with, it's a discussion my parents and I have had as they are convinced we should own a property as soon as possible. Yes I'd rather we owned our own house for the reasons I said in the OP, but if you seriously think that I am the kind of person that would want to put my parents at risk then, well, actually you don't know me anyway so of course you wouldn't know that.

And I must say, out of everyone that I know that owns a property, I think only one of them has three months mortgage payments saved up. It's a good idea though. Maybe they should make that a rule before people can take out a mortgage so it's in a protective scheme or something so then if people do get in the shtuck then it can be called upon, and if they sell their house then it's automatically released back to them.

Screaming match? Since when was there any volume or tone of voice in a forum post? If you read my post a little more carefully I deliberately used the word OR so living outside your means was one of three possible scenarios - no assumptions. Also note the use of question marks in five or six places, I don't just think I ask.

Just because your friends and relatives are ill prepared doesn't make it acceptable or sensible. Repossessions and negative equity occur largely because people assume the market will only rise and assume the worst will never happen to them. Having three months mortgage payments saved is standard financial advice, agree with your wholeheartedly it should be a condition of mortgages.

Maybe point out to your parents had you purchased any time since 2007 you would have made a hefty loss, maybe even been in negative equity? We are in the middle of a recession, prices are not starting to rise exponentially any time soon so you have plenty of time to save up. What is being proposed DOES put your parents at risk, if you don't want that maybe turn them down flat.

thelem

Would your parents actually be better landlords than a typical private landlord? Or would you run in to the usual problems and risk the relationship you have with your parents?

Blackpool_Saver

If in doubt.........hug

tricklesthegreek

I will be - I think it's because they're in a generation of thought that believes you are not successful until you buy your own house. I will certainly bear in mind the three month rule, because it would mean (when things are back on track for saving) waiting an extra six months. I think if mortgage company's made it a condition of lending they would have never got into the mess they did in the first place. Well certainly a lot less anyway.
Would never want to put my parents at risk so I guess the idea is to leave it for now. They are lucky they have equity in their house - they were going to sell up and go to Greece and give us the difference in equity as my dad is from there, but given the climate over there now and my dad's health problems they are staying put and getting by as best they can.