Mortgage natwest

Lipstick85

Sorry I ment to say to sign the contracts ready for exchange on both my parents property and the new purchase.

Originally we were going to buy the property for 85k then there was going to be a deed of gift but because of the problems above I would like to know if it would be possible to change the mortgage.

This would require me buying the house at 26k which is obviously below the market value of what the house it worth. My parents would then receive the 26k to pay off their property.

I would then need to release equity from my parents which I have bought to pay the deposit on the new home. I just want to know if this would be possible?

Thanks

Thrugelmir

Lipstick85 wrote: »

I would then need to release equity from my parents which I have bought to pay the deposit on the new home. I just want to know if this would be possible?

You would need to own the property for 6 months before making an application for a remortgage.

Lipstick85

Is there any other suggestions of what we could do?

Could we go ahead with the current mortgage but advise we are paying 26k instead of 85k and using the remaining for a deposit on another property?

Thanks

holly_hobby

I am sorry to be the party pooper here, and although your broker knows that your Mum and Dad will remain in the property post completion, thats irrelevant in the greater scheme of things, as he/she isn't lending the money.

The salient point is does the LENDER know that the Vendor (whom are also family), post completion on a buy to let mge, will remain resident and tenant.

My guess is no, because this becomes a sale and rent back arrangment, which the FSA have clamped right down on and lenders don't permit, further to which a regulated BTL mge is required (as the tenants are be family members - which most lenders assess as a 2nd property application), and as I stated earlier we also have possesionary issues to boot, in respect of the fact that the lender/you will not be securing vacant possession on completion.

Now, its either the case that your broker has (although aware of the above isssues) has chosen not to inc the info re Mum & Dads residency in the casework, or its a case that they simply do not understand the implications with the lender, of what the tenancy arrangements will lead to - either way they haven't done their job properly (or don't have the experience/knowledge), if the lender is completely unaware of this fact.

I understand you may think the lender has no risk, and the above is irrelevant, but from the lenders and Solicitors point of veiw, its anything but ....... and the ramifications from the lender of such non-disclosure may be serious.

I can't over egg it that, selling at under value, getting a buy to let mge, swinging from the lamp post, is all compromised due to the issues surrounding the new BTL mge and the lenders issue of vendor sale/rent back and vacant possession requirements.

The issues re means tested benefits, are that if your parents gift a sum a money away, and then seek to claim MT benefits (which are designed to assist those with a low level of income and savings below 16k), they will be seen to have put themselves in financial hardship by giving money away (to help you buy a house), and then simultaneously claiming they don't have enough to live on by seeking MT benefit assistance - to which DWP will require bank/bsociety statements both recent and for the previous 6 mths pre submission, to support their claim of eligibility - which the capital injection from the hse sale will be evidenced.

They will also have to disclose if they have sold a property in the 6 mths prior to submission of claim - refer above.

Hope this helps

Holly

holly_hobby

Lipstick85 wrote: »

Is there any other suggestions of what we could do?

Could we go ahead with the current mortgage but advise we are paying 26k instead of 85k and using the remaining for a deposit on another property?

Thanks

Sale at under value - not accepted with a few BTL lenders (but family assisted may swing it (and putting to one side the vacant possession issue) ...... you must generally wait 6 mths from completion (there may be a BTL lender who permits less than 6 mths ownership before equity release or a remortgage (ie move to new lender & release equity), but I don't know of them - someone else will shout it they do.

But you must understand, the issues the lender will have with regards the Vendor remaining resident post completion, which if not already revealled may be the killer on this.

Out of interst, who is the BTL lender for the pch of Mu and Dads house ?

Also, as a side thought, how about Mum and Dad moving in to house no 1 on completion (ie the one you live in now, and are to rent out), as this would go someway to resolving the VP issues being discussed and relevant to their sale - of course if this is to be the way forward the BTL mge currently being sourced must be from a regulated BTL lender, and will probably be assessed for affordability as a 2nd property.

Hope this helps

Holly