Mortgages

Cpu2007

Hello everyone

I hope someone can guide me on this. My question is a bit weird maybe and I apologise in advance if it comes out as too stupid but I genuinely need some advice on this.

There's a house that I'm looking to buy and the price of it is around £100k. Now I don't have that amount at the moment; I have around 10k that I can use on it plus I have some very generous friends/relatives who are willing to give me around £40-50k straight away.

I'm looking to get a mortgage and wanted to what is the best option for me? what is the best way to get a morgage that is flexible and with low interest; there's one where I have to pay for at least 2 years and then, if I want, I can pay everything to finish off my morgage.

My intention is to be able to pay off everything after two years but I want to reduce the amount of interest that I'll be paying on the morgage and for this I need some advice on what methods are available to achieve this.

Thanks in advance

Ciderarmy1987

Are your friends/family willing to GIVE you the money or LEND you the money? There is a big difference!

Out of interest where are you planning to getting 50K in the next 2 years?

Cpu2007

Im sorry I should have clarified that; it is lending but they don't need me to pay any interest and they said that there's no problem on how long it will take me to pay them back.

Again, it will be them who will be giving me the rest of the money; they said that they could have done it now but they have money invested in other places and the total I managed to get from all of them was around 40-50k but they said that within 2-3 years they can give me the rest as well.

Ciderarmy1987

Ok fair enough, probably best to take out a 2 year fix. However lenders aren't that keen on you using money to buy the house that has been lent but dont know how they are when you have this much money, guess it would still be the same though as you dont have much of your own money.

How long are you planning to take to pay people back? will you have a repayment plan? do your family realise that if you pay back over a long time they will lose a great deal of money through lack of interest/inflation etc,
What would happen if you become unemployed etc

Cpu2007

Some money will be sent to me by cash, some via bank transfer - will this still cause problem with lenders not being keen?

In addition, I'll be getting a mortgage which is something that I want to pay as soon as possible and thinking of whitin 2 years but don't know which would be the best one and with the lowest interest rate, any advice on this?

yes obviouly it will take me a lot of time to pay them back(not all of them as some are giving me less than others) but I'm putting a limit of 12-15 years. Most of them will be giving me sterlings from euro as euro is strong at the momen.

They are aware of this and this is one the reasons why I want to pay off the debt as soon as possible, if something goes wrong, I can still sell the house and give them their money back; this might put me on some loss but it might give me some profit, depending on the house prices in the future.

Yorkie1

You may have difficulties with lenders with what is proposed, both because the money is a loan rather than gift (and this will have to be declared) and also, I think, because some of the money is not coming from close family but from friends.

olly300

Cpu2007 wrote: »

Some money will be sent to me by cash, some via bank transfer - will this still cause problem with lenders not being keen?

The money needs to be traceable.

In other words don't deal in cash as even if you aren't money laundering both your bank and your solicitor will think you are.

The bank can refuse to accept the money and freeze your account.

Your solicitor can refuse to deal with you.

Get everything done by bank transfer and cheque.

Ciderarmy1987

I might be very wrong, but seems like quite a dodgey situation and if you are honest with your solicitors and lender they will steer well clear of you

On the face of it seems like a classic money laundering case

Kayalana99

Ok Im going to break this down so potentially you want a mortage for 50k (possibly 60k but lets keep it simple)

You want a LTV of 50% on a 100k house. Would the people lending you the money be willing to sign a document saying it is not a loan but a gift?

Without this you will find it very hard to get a mortage because to them - they need this to make sure if you for some reason got repossed that no one else but you would have money in the property or it may comlicate things.

That being said, not impossible but you should find yourself a mortage broker to help you out with this as - try and find one someone recommends and not use the one the EA trys to pawn off on you.

I don't think you should be worried about the interest rate because this is not what is going to kill you.

Round about figures 90k mortage for 2 years...interest only at 3% is 5,400 ..4% is £7200 ....Ish

So ok 1% is going to make a differnent but you will find that mortages cost you; for taking the mortage out, for ending it early.

& because you only want it for 2 years I think those two costs are the main two you need to look at. You need a broker to talk this through as I think its going to be really hard to find a mortage company that lets you buy out early with no costs...or at least one that doesnt charge you alot to do it.

Bottom line : Get a decent broker.

Cpu2007

kaylaana thank you for the make this clear. I'm trying to keep the interest as low as possible for the simple reason that it will affect me. I'll be the one who will be paying the extra interest and I want to keep this low so that I can pay my relatives/friends back and the mortgage.

I don't have any problem with bank transfer, they have good jobs and properties so it's not money laundering and if they transfer money to my bank account I hope there's no problem;

So you're saying that if I ask them to send me money as gift than it will be easier than showing the money I received is lended?

Kayalana99

It would techinally be fraud but its what we did...Dad lent me 10k and had to sign it as a gift.

I agree with the above if you can avoid it don't take cash...when you go to get the mortage they will ask you if you have borrowed any money or had any gifted to you...you say yes its a gift from family..etc...and they say can they provide a signed document saying it was a gift?

Problem is with this bit of paper is they are signing thier money away...so if in 20 years you havnt paid them back you have a piece of paper saying it was a gift..so are they def willing to sign it?

Untill you get to that stage it won't matter - as for ' Ask them to send me money as a gift' Thier is no way to send it as a gift its just the letter they will be after.

I understand you wanting to keep interest low thats normal - a broker can help here as well :-) but I was just pointing out that a 'low' interest rate may come with a high interest buy out fee...which you will need to watch out for if your planning on paying it off sooner rather then later.

Ours allows us to pay 10% off a year without charge..if we were to pay it all off today they would charge us about £2000 for early repayment fee.