Buying my parents House then renting it back to them!?

danthefunk

My parents are separating and as neither one of them can afford the mortgage repayments on there own they have no choice but to sell.

I understand they have about 96k owing which includes a secured loan and 8 year term remaining on the mortgage so monthly payments in excess of 1k a month with the idea of clearing it before they retire.

It has been valued at 140k this week by the local estate agent.

I have discussed with my dad of purchasing the property at 96k clearing his mortgage & loan and then him stay in the property and pay my mortgage rather then rent and pay some one else! Saving him money in the process and without the stress of finding somewhere else. And ultimately a long term investment for myself.

How would I go about this as I dont want it to complicate my current mortgage and have no free cash in the way of deposit.

Any advice would be more then welcome.

Cheers

Danny

Fire_Fox

Welcome! It's worth running an advanced search, variations on the theme of buying to let to family come up regularly. Do your own valuation, research land registry sold prices for the street and area, estate agents often overvalue.

Generally lenders do not permit BTLs to family and you would certainly need a substantial deposit, although this could be gifted from your parents - of course that leaves them with nothing. They may well not be entitled to any means tested benefits as the arrangement could be deemed a 'contrived tenancy' and they have gifted away their equity.

Are you sure one of your parents cannot continue to live there? Have they considered taking in a lodger or two for a tax free income of up to £4K a year? Would they be eligible for any benefits such as Support for Mortgage Interest? Could they reduce the payments with a better interest rate or longer term?
https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme
http://england.shelter.org.uk/get_advice/help_with_housing_costs/support_for_mortgage_interest

angelsmomma

What about the £44,000 equity in the property. Your father gets to stay in the house but your mother gets nothing, is she ok with that?

G_M

If you have no savings for a deposit you will struggle to get a BTL mortgage.

If you do get a BTL mortgage, you may not be permitted to let to family.

If you are permitted to let to family, it is an unwise thing to do - read here.

It seems unfair for your mum to have to leave with nothing, your dad to keep his home, and you to purchase a cut-price property.

kingstreet

BTL mortgage using "family concessionary purchase?"

Yes.

"Regulated" BTL mortgage for a family member to live in?

Yes.

Both together in one product/lender?

Not that I know of.