Can we get a mortgage?

daftsod11

Hi all. My girlfriend and I would like to buy my fathers house. But here's the catch. I am currently in a DMP of approx £20K. My father is moving away but wants us to have the house at a cut price. The house is currently valued at approximately £120k. He wants £90k for it. Is there anyway of us buying it to consolidate my £20k DMP, and give my dad £90k, just to end up with a mortgaged house?

kingstreet

In a word, no.

The transaction you are describing is known as a "purchase at undervalue from a family member." Some lenders will permit it, allowing the reduction in the price your deposit, but it won't allow you to borrow more than that discounted price.

You could pay your father more for the property and he could pay off your creditors, but that has another problem.

If you are in a DMP, your credit history is probably not going to be acceptable to a lender. If you have CCJs, defaults and a string of missed/late payments, you would only have a chance of a mortgage where the loan to value is under 75% - if at all.

Whatever equity you will get in the property is going to have to remain equity in the property. It isn't going to be available for you to use to consolidate debt.

daftsod11

Thanks, would it help at all if we had some gurantors?

daftsod11

As the advisor said above the cut price would be granted a mortgage without the need of deposit, but could we get that mortgage for the cut price with my DMP still at large?

kingstreet

Unlikely.

A lender may accept a guarantor when it's a bit doubtful about the level of borrowing.

It isn't normally possible if the lender doesn't really want your business due to a poor credit history.

A guarantor would certainly make no difference to the debt consolidation plan.

daftsod11

So there is no way we can buy the house from my father then?

kingstreet

I'd never say never, but it won't be easy...

You need to get hold of all three of your statutory credit files;-

Equifax

https://www.econsumer.equifax.co.uk/consumer/uk/order.ehtml?prod_cd=UKSCR

Experian

http://www.experian.co.uk/consumer/statutory-report.html#orderReport

CallCredit

https://www.callcredit.co.uk/stat-report-online/index.php?action=basket_add&tpl=setRegister&package=63&amount=1&mode=clear

Which you should take along to a meeting with a good independent or whole market mortgage broker. Ask friends and relatives for a recommendation. Failing that, use https://www.unbiased.co.uk remembering to switch off "sponsored ads only" option so you get a full list, not just the paid-for adverts.

The £2 statutory paper files will be fine. Avoid online schemes you have to pay for which give you your inside-leg measurement and call it a "credit score."