How can parents help me buy flat?

MisseeLee

What are the options for my parents and myself for buying my 25,000 flat. My parents own their home, I'm a council tenant unemployed at the moment. Options we know about are mortgage guarantor (my idea) and releasing equity (dad's not keen on) are there other options out there please?

00ec25

crazy idea

- you are unemployed so have no income therefore cannot possibly get any sort of mortgage in your own name, guaranteed or not

- you need £25k which in the grand scheme of things is a trivial sum of money yet your parents are reluctant to release equity from their own property presumably because they would have trouble getting a mortgage themselves (too old?) or cannot afford the repayments ?

- you propose to exchange the security of tenure you currently have in a council property (which means you can get the rent covered by benefits) for owning a flat where you will not get the mortgage costs covered by benefits and you could easily be faced with a large cost for your share of any maintenance works the council does on the common parts of the building

- refocus your ideas on getting a job and forget about RTB

HappyMJ

As above..your rent is paid in full by housing benefit the mortgage will not be.

Just getting a job on minimum wage should be enough income to support repayments on a mortgage of £25,000 so I'd be looking at getting a job before buying the property.

MisseeLee

Thanks for the replies guys. Yes of course you're right I need a job first which I am concentrating on before I even apply for RTB.

My dad was interested in other ways to buy it, seeing what other options might be available.

TBagpuss

Your parents may be able to lend you the money, secured by a private mortgage over the property. That way, they have security (just like any other lender) but the property is in your name. HOWEVER you would need to chekc the position regarding benefits etc - generally speaking, you can't claim housing benefit if your landlord is a parent or other family member - the same may apply to being able to claim Mortgage Interest Benefit if you lost your job in the future.

If you are able to get a job and then apply for a mortgage, you may be able to get a £25K mortgage without needing your parents to stand as guarantors, especially if your parents are able to give or lend you money for a deposit. I assume that the flat is actually worth more than £25,000 and that the RTB means you;d be able to get a substantial discount? That should help in applying for a mortgage once you have a job, as you'll have a lower LTV.

You might be able to buy with you and your parents (or one of them) as a joint owner/joint borrower if you have difficulty getting a mortgage in your sole name.

McKneff

And if its a flat, and the council decide to re - roof the block or anything similar, you are going to be hit with a bill for thousands of pounds.

cattie

As it's a flat, who is going to be paying the yearly maintenance/service charges? These could be in the region of £1-2k per year & do rise each year.

Added to this is the possibility of huge repair/maintenance bills whenever something needs doing to the block/s or communal areas as pointed out by McKneff.

It's pretty silly to be thinking of buying such a property without a secure job behind you with which to support yourself & all related bills that come with owning a flat.

MisseeLee

Tbagpuss the flat is worth around 70,000 with my discount I should get it for 21,000 the extra was for solicitors etc.

Maintenance/service charges are around 800 a year.

The council will inform of any future work (5 yrs) to be done on the flat before I purchase, so I can weigh up the pros and cons.

Could anyone please advise me on what is meant by a secure job?

beecher2

TBagpuss wrote: »

You might be able to buy with you and your parents (or one of them) as a joint owner/joint borrower if you have difficulty getting a mortgage in your sole name.

Don't you have to be named as a tenant of the house to be on the mortgage of a RTB house?

A secure job is one which is permanent and where you're not under probation, or under threat of redundancy. There's really no such thing any more in my opinion - you just need to find a job which pays enough to cover your bills. Just keep in mind how much security you'd be giving up.

kingstreet

RTB is tenant and a family member who has resided in the property for at least 12 months, so no, the parent can't be a joint applicant.

ging84

When i was buying a flat and came into difficulties securing a mortgage, my parents re-mortgaged their house and lent me the money to buy my flat with cash, it was a separate account to the main mortgage so it was very easy to keep track of, It actually worked out a fair bit cheaper than if it had been in my name.
It was done totally informally, i could have run off with their money, but i didn't, when the flat sold i got a statement of the outstanding mortgage and wrote a cheque and that was the end of it.
I would saying doing it this way, although slightly more formally would work out better than any kind of guarantor scheme, as as a guarantor you end up the same liabilities, extra cost and less control, if i had missed a payment, my parents would have been informed right away, if they were guarantors they'd probably not find out till i got into real trouble and the debt would have gone up with all sorts of arrears amounts and fees.