Mortgages - Helping Parents??

mc.

Hi there,

I am a soon-to-be graduate with a guaranteed job offer paying fairly well. My parents, who have always been eternal renters are saving up to put down a deposit for a mortgage of their own, however due to the nature of their jobs and their age they are concerned that no bank will offer them a mortgage, the natural solution is then to put my name on the mortgage to provide the backup of a reliable income and career prospects.

Of course I would be more than happy to do this, I would love to help my parents and this would be a great way to repay them for bringing me up – plus in theory this could boost my credit. However, I am concerned that having my name tied to an existing mortgage will mean that when I want to get a mortgage of my own (possibly after 3 years or so) I am going to run into some difficulties!

As a student I have no experience in these matters so any help will be very much appreciated! Is there any way around this problem? Could I act as some kind of guarantor rather than literally being on the mortgage?

Thanks guys

PS some info:
Graduate starting salary: mid 30s (pretax)
Parents combined income: mid 30s (pretax)
Parents desired mortgage size ~ 200k including deposit

corkyefes

Hi,

Not 100% sure on this, but I think your best option would be to apply for a 'buy to let' mortgage which would enable you to rent it out to your parents (check with your lender that they allow to rent to family members).

Then when you come to applying for another mortgage (for yourself), they will take the house that your parents live in as an income and will be accounted for (as long as the rent covers your mortgage and you have filled out tax returns), therefore allowing you to have a 2nd mortgage.

I hope this helps, but Im sure someone can give more information.

Dave_Ham

Hold fire, some more information would be useful.

What deposit can you parents put down?
How old are they?
What line of work are they in?
Are you going to live with them initially?

That should be a start and you can get some more specific opinions and answers.

somethingcorporate

Most B2L lenders require you to own your own residential property so that is likely to be a non-starter, additionally, there will probably be a clause in the contract that will not allow you to rent to family.

What do you think will happen when you want to buy your own place given new mortgages are generally 25+ yr commitments?

mc.

Dave_Ham wrote: »

Hold fire, some more information would be useful.

What deposit can you parents put down?
How old are they?
What line of work are they in?
Are you going to live with them initially?

That should be a start and you can get some more specific opinions and answers.

Thanks for the replies everyone, as for the above questions:

What deposit can you parents put down?
Probably about 40k maybe slightly more

How old are they?
40 and 50

What line of work are they in?
full time restaurant worker, part time carer

Are you going to live with them initially?
No

Hope this helps!

Dave_Ham

Then term does not really require your input, dependent upon what salaries they are on?

mc.

Not sure I understand,

They would take any term they could get, however their main concern is being approved at all! Their salaries would be sufficient to pay the mortgage over say a 20 or 25 year term, but due to the nature of their jobs, the bank may not see it as a completely dependable employment. I would not be actually be contributing financially to the mortgage - only on paper.

hope this answers your question?

amnblog

Hi MC

I believe your query was:

However, I am concerned that having my name tied to an existing mortgage will mean that when I want to get a mortgage of my own (possibly after 3 years or so) I am going to run into some difficulties!

The answer to that one is yes, potentially. Any lender will have to consider what is happening with the existing mortgage when they consider you for a new one.

(A bit puzzled as to why your parents have now decided to buy)

Dave_Ham

Hi there,

What are their salaries and why do you think a lender would not accept?

Any fixed term, agency contracts etc. Please do mention..

I would fancy you may not even be needed, also what monthly budget have they set?

Building_Surveyor

Helping your parents out is a very kind thing to do, but putting your name down on a mortgage means you will be financially responsible whether your contributing or not. If It all goes wrong should you parents get into difficulty then you will all be responsible not just them. And if they are looking at a 200k house, when you come to want to buy our own house, how will you prove you can sustain both mortgages?

mc.

Well I suppose my main query was whether there is any way I could help them without running the risk of ruining my chances of getting my own mortgage in the future?

You are quite right in that they may not even need my help - that would be great - but given their ages and the fact that their jobs are not completely dependable it seems unlikely that a provider will offer them a mortgage with a term long enough so that they could afford the repayments (probably 20 or 25 years to be honest) or do you think that could be achievable?

I like the buy to let idea, does anyone know of any providers that would allow let to family at all? My grandmother could transfer her small house to my name which might solve the problem of me having to already own a residential property? I hear that's a good idea anyway nowadays in case of ill health.