Mortgage affordability question!

natureboss

Good evening!!

I've been living in my grandpa's house for 14 yrs now and would like to buy his house.
My grandad would like to split the equity from the house in three. He is going to sell the house for 330000 .
I'm going to use 1/3 110000 as a deposit on the house. So will be looking for 220000 mortgage for the house.
I earn 41k and looking at mortgage calculators I could at max get 205k.
Considering that we had valuations of the house at 400k in current conditions and 600k fully refurbished. Do you think banks will be a little flexible??
And which provider should i go with???

Many thanks!!

ACG

No, the amount they will lend you is based on your income - not on the properties value. The house could be worth £10 million but theyre not going to lend you a million even though its only 10%.

Also assuming you grandpa is staying in the property you would probably find most lenders have an issue with this. £205k is probably the maximum you are going to get under any lender. On £41k a year living with a relative, it shouldnt take too long to save up the £15k shortfall?

natureboss

Agree, at the moment grandpa is living in another property, nearly 4yrs now. I will be living with my parents, they have just opened a business, so don't have much proof of income. Do you think it will be a good idea to try with a broker?

ACG

Ouch! You work for parents and can only show limited income proof?

There seems to be more to this than your letting on? Will the property to be empty?

You might struggle to get the £205k depending on the picture as a whole.

natureboss

Fortunately I don't work with them! I meant they can't be considered as joint applicant. The property is not going to be empty because we are living in that house. Would that be a problem?

ACG

Basically your grandpa is selling the house, hes living abroad so you are looking to purchase the property to live in with your parents?

Your income is earned from a non family business and you earn £41k?

natureboss

Correct, only fact grandpa is living in the uk

ACG

Sorry - misread property for country some how, my mistake.

I think £205k is going to be the maximum your going to get anywhere really. 5x income really is pushing the limit, it may be possible to get 5.5x but because the deposit is basically gifted it doesnt look good that you have saved up nothing significant yourself.

natureboss

Thanks much appreciated!

shaundiamonds

Try the Halifax concessionary mortgage - use value of house v's amount seller wants as deposit - worked for me this May! I lived in the house prior to buying too. Not many people know about this little deal, get a good broker too.

sockpuppet

A concessionary purchase isn't a 'little deal' the majority of lenders will allow a concessionary purchase where buying a property at undervalue from a relative.
The difference between the property value and the amount the vendor will accept can be used as the deposit, but you will still only be able to borrow as much as your income will allow for the balance.