first time buyer worries

mpe1973

Hello everyone, has anyone had any experience of doing this:-
We have found a new build house which we would like to buy, but the deposit required is just too much at the moment. Our mortgage advisor suggested that my mother in law buy the property as a buy to let, then rent the property to us until such a time that we could afford a mortgage then buy the house ourselves. Good idea or bad idea???? What could be the potential pitfalls?. No mother in law jokes please she's a lovely woman

Ciderarmy1987

mpe1973 wrote: »

Hello everyone, has anyone had any experience of doing this:-
We have found a new build house which we would like to buy, but the deposit required is just too much at the moment. Our mortgage advisor suggested that my mother in law buy the property as a buy to let, then rent the property to us until such a time that we could afford a mortgage then buy the house ourselves. Good idea or bad idea???? What could be the potential pitfalls?. No mother in law jokes please she's a lovely woman

If you could answer these questions it will help a lot

How much is the property?
What percentage deposit do you need?
How much money do you actually have now?
How much are you able to save each month?
How much rent would you be paying?
How secure are your jobs at the moment? (hard to answer I know)

I would say it probably sounds like a bad idea but the answers to the above questions will help give a lot better idea

mpe1973

Hi,
Property is approx. £130,000, as a new build a 15% deposit is required, as regards money saved, the advisor told us to clear credit cards loans etc,.prior to looking for mortgage plus also rebuilding my credit history. His advice was as follows:-
mum in law takes mortgage out on her property to cover deposit on new house. Mum in law then takes out a second mortgage ( buy to let ) on the new property for the balance. The costs of both mortgages would be around £550 pcm.

the rent that my mother in law will receive will the cover mortgage costs until we have deposit saved

Ciderarmy1987

I wouldnt buy a property that has is above 125K (Stamp duty level).

Is £550 a month that much cheaper than your current rent? after factoring in cost of repairs etc

What would happen if you or your partner lose your jobs and can no longer pay the mortgage? What about it the property drops in value? you cant just agree to buy at the same price as banks wont lend you above market value.

What is the rush to buy right now? I'm guessing from what you have said that your finances are so bad that banks wont lend to you even if you had the deposit. why dont you just wait until you are in a position that you can get approved on a mortgage, maybe with some help towards the deposit and by then?

mpe1973

You guess wrong.FYI our finances are not bad and the whole idea was to find alternative ways to getting into a new build without incurring the 15% deposit. We are looking at a specific house on a specific site. We have found that schemes offering deals for new build / first time buyers aren't all they are cracked up to be. If we were looking at an older house we wouldn't be asking

Ciderarmy1987

mpe1973 wrote: »

You guess wrong.FYI our finances are not bad and the whole idea was to find alternative ways to getting into a new build without incurring the 15% deposit.

I only mentioned your finances because you brought it up!!!

mpe1973 wrote: »

Hi,
the advisor told us to clear credit cards loans etc,.prior to looking for mortgage plus also rebuilding my credit history.

mpe1973 wrote: »

We are looking at a specific house on a specific site. We have found that schemes offering deals for new build / first time buyers aren't all they are cracked up to be. If we were looking at an older house we wouldn't be asking

If are finding the deals on the new build arent great and you can afford to by an older house then I would go for that instead. New builds are generally quite overpriced- hence banks insisting on a 15% deposit.

mpe1973

it was surprising to find out what affects decisions made by lenders, such as credit cards and how big limits on credit cards have an adverse affect. You'd have thought it would be the other way round! this alternative of using a buy to let as an option to get into a new build is something initially we were all for it but now we are a bit cautious

Ciderarmy1987

So how much outstanding debt do you currently have?

mpe1973

About 5k for car loan, sofa, c.cards all due to finish in the not to distant future

Ciderarmy1987

and do you have any savings?

mpe1973

not enough for a deposit !!!!!!