Need some advice

Phaelok

Hi everyone,

I currently live with my parents and I am looking at moving out in the next 12 months to buy my own property but find myself in a dilemma.

My parents have the option to buy their house under the RTB scheme of approximately £44k but do not have the funds to do so and are close to reaching retirement age. Both my parents would like to own the house and I feel as though I could help out by purchasing it for them. Typically houses in the area sell for £120-£130k.

The dilemma I have is that the mortgage company have offered me £145k, excluding deposit, and I have around £10k in savings and I simply do not know whether to purchase two properties or one.

Would this be a wise investment?

Thanks

kingstreet

You can't buy it for them.

The tenant has to be party to the purchase, although if you have lived there 12 months you could also be a purchaser. The mortgage will have to be in the names of all the purchasers and the problem will surround their ages and the term of the mortgage which may not be very long if the lender wants it paid off by 75 and they are close to, or at retirement!

I suggest you get help from a whole market broker.

Linking yourself to their financial situation may cause you headaches in the future when you want to buy.

Phaelok

Thanks for your reply KingStreet

I have lived there my whole life and can be named on the mortgage, although this will have to be done jointly with either my mother or father.

They are both coming up to 60 and I know the mortgage term will have to be short, however as the purchase price is £44k I would envisage no longer than a 10 year term, if that.

I do appreciate your comments re financial situation...will have to bear that in mind too!

kingstreet

Yes. An existing mortgage will see a lender for a home for you taxing you the cost or value of the existing mortgage and reducing what you can borrow accordingly.

In addition, many lenders won't lend as much on a second property, for example 85% is the maximum Nationwide would lend if you wanted to buy for yourself.