Taking over a mortgage

mikeweeds

Hi All!

I want to take over the mortgage from my parents on my house - basic story is that just over a year ago I bought my first house but the only way I could secure the mortgage was taking it out under my dads name as my salary wasn't sufficient at the time. My circumstances have now improved and I'm in a position with the money I have been saving each month to cover the costs to now take my own mortgage, whilst essentially buying my dad out of the mortgage he holds for me.

Can you please help advise the best way to go about this? Do you also recommend interest only for the time being, or it is wise to start paying off?

THANKS!!

Dave_Ham

There are loads of variables here to consider..

How much is the property worth?
Is Dad currently on a fixed deal?
What is the current mortgage value?

These will allow us to answer some questions as you need to be careful of stamp duty, early repayment charges and generally the level of product you will getl...

hcb42

If you can only pay interest only, then that's not enough to pay it off. You need to be able to repay capital, or it will still be owed years later..(lots of threads on here about how that has gone wrong.)

mikeweeds

Dave_Ham wrote: »

There are loads of variables here to consider..

How much is the property worth?
Is Dad currently on a fixed deal?
What is the current mortgage value?

These will allow us to answer some questions as you need to be careful of stamp duty, early repayment charges and generally the level of product you will getl...

Thanks Dave,

the property is worth 220000, Dad is on a fixed deal yes and the current mortgage value is 170,000. I own all the title deeds and the house is my name if that also helps for consideration?

Dave_Ham

Not sure I get this, long day though...

So you think you are on the deeds and Dad is on the mortgage on the same address?

Are you 100% sure on this, apologies if I have missed the point...

mikeweeds

Dave_Ham wrote: »

Not sure I get this, long day though...

So you think you are on the deeds and Dad is on the mortgage on the same address?

Are you 100% sure on this, apologies if I have missed the point...

Sorry, no the situation is that he took a mortgage out on his home (he had previously paid his mortgage off) to help pay for my house. So essentially I would be taking out a mortgage under my name to buy him out. When it comes to selecting the right mortgage type, I'm not sure whether I should be selecting a re-mortgage or first time buyer? It almost feels although I'm between the two...?

GMS

It would be a remortgage as you already own it.

What is your salary now? Interest only is not an option at the level you are looking for.

Dave_Ham

Cool - thanks I get it..

You would be capital raise remortgage. You need to ensure Dad does not redeem his mortgage whilst he will have a penalty, unless of course the numbers are cracked and it makes financial sense...

Best of luck

mikeweeds

GMS wrote: »

It would be a remortgage as you already own it.

What is your salary now? Interest only is not an option at the level you are looking for.

40K salary....

mikeweeds

Dave_Ham wrote: »

Cool - thanks I get it..

You would be capital raise remortgage. You need to ensure Dad does not redeem his mortgage whilst he will have a penalty, unless of course the numbers are cracked and it makes financial sense...

Best of luck

Cheers Dave - much appreciated!

GMS

Before you apply anywhere make sure the affordability passes. 170k loan is 4.25 x income. Not all lenders will stretch that far and any credit commitments, dependents etc will impact further.

If you are unsure a broker could be useful to you.