Confusing advice

Tommyh

I have a very confusing situation, which I hope someone will be able to help me with.
My mother has recently put her house up for sale, due to the fact that her ex husband didnt get an endownment with the mortgage. As she has been working abroad for about 12 years, but been paying the mortgage from her current partners bank account, she only opened her first account in the last week, so when she applied for a remortgage they refused her owning to the lack of credit history. The house has been valued, and put on the market, just shy of £90,000, and by all accounts she will take away about £30,000.
Now, this house is where my brothers and sisters were bought up, so has lots of memories attached. My question is this; do you think it's possible for me to take out a mortgage of say £75,000 but telling the bank that the deposit is tied up with her in the house? I.e. once she sells the house to me, I put the profit straight back into the banks pocket (for want of a better phrase), she would then rent the house back to me for the price of the mortgage repayment. I would also benefit from it because I will have a house I can use or sell in future.
I need to add; the house needs about £20,000 of work done to it, something she wouldn't really bother me about. So there is scope for a profit to be made. Also, I have a mortgage in the opposite side of the country, so would this go for or against me?

Anyway; i've explained this the best I can, I hope someone can help or understand.

Many thanks

Tommyh

Annisele

Tommyh wrote: »

My question is this; do you think it's possible for me to take out a mortgage of say £75,000 but telling the bank that the deposit is tied up with her in the house? I.e. once she sells the house to me, I put the profit straight back into the banks pocket (for want of a better phrase), she would then rent the house back to me for the price of the mortgage repayment. I would also benefit from it because I will have a house I can use or sell in future.

Are you saying you want to buy the house for £75k, use your mother's equity as the deposit, and then have your mother continue to live in the house and pay you rent? If so, then no that isn't possible (unless the £75k comes from cash, not a mortgage).

If the house really is £90k, then in theory you could buy it for £75k without a deposit - but only if you were going to live in it without your mother.

The problem with your plan is that your mother will still be living in the house. So, she'll have given you £15k so you can buy the house she lives in - which would be a problem if the bank wanted to repossess. That means the bank won't want to lend to you in the first place.

Tommyh

I knew they were strict about lending. Even more so now. I could tell them that I'll be living there with her, would that help? Or is it to do with the fact that if they did have to repossess (which i'd like to think would never happen), she'd be made homeless?

Annisele

You shouldn't tell the lender anything that isn't true. That's another name for fraud, and if you get found out you'll be in a whole heap of trouble.

But it wouldn't actually help in this case. If you want somebody to lend to you while you use your mother's equity for a deposit, your mother can't retain any rights over the property. That includes the right to live there.

Your whole plan is also into "sale and rent back" territory, which lenders don't like one bit.

Why can't your mother remortgage in her own name? Is the problem age, income, or something else? Would it be possible for you and your mother to take out a joint mortgage?