A bit of unusual question - mortgage on fully paid property?

moon_river

Hello everyone, I am quite new to this forum, hopefully this is the right place to ask!

Basically, after years of saving, my OH and I have been looking to buy a property since this summer. We have approached various banks and independent mortgage brokers, regarding how much we can borrow. We were told pretty much the same thing. Due to my OH's work circumstances (income mostly from tips), we can only try to apply, and we might even have to apply on the basis of my income alone. But even if everything goes smoothly, what the bank is willing to lend us really isn't quite enough to buy anything reasonable in the southern coast area. The rent we are paying each month is already really high, so repaying the mortgage really isn't a problem for us.

So basically, we are fortunate to have a very supportive family. They are willing to buy the property outright for us first, if that means we can secure a property.

But I just wonder would this work at all? Can we use the property as some sort of equity to apply for a mortgage/loan so we can repay the money?

Any advice is highly appreciated:j Thank you.

AlexLK

Come up with an arrangement with your family and pay them back for the property, plus interest if they wish.

moon_river

Thanks AlexLK, that's what our family offered. But we both really are not comfortable to take such a large sum of money off our family. But at the same time we don't look good on the paper either...

Just picking everybody's brain really:p

AlexLK

I fail to understand why you are uncomfortable with "taking" the money when you have arranged to pay them back?

Annisele

moon_river wrote: »

Can we use the property as some sort of equity to apply for a mortgage/loan so we can repay the money?

A mortgage is just a loan secured on a property. If a bank won't lend to you before you buy the house, it's very unlikely to lend afterwards.

When you say your family are willing to buy the property outright "first", what exactly do you mean? Will your family lend you the money (effectively a private mortgage)? Do they have the cash to buy outright? Will they be taking out a mortgage in their own names as a buy-to-let?

Building_Surveyor

Are you asking if you can take a mortgage out at a later date to repay your family?

Poppy9

Buy the house in your name, with the mortgage that the bank will give you and the balance as a loan from family as a deposit.

Once you own the house you still won't be able to borrow anymore money from the bank unless there is a change in your earnings.

i.e. I own my own house outright with OH as we have paid off mortgage. If I wanted to remortgage for any reason the bank would still only lend us an amount based on our income as they look at affordability of loan and if they lent us £300k we couldn't repay it from our earnings.

moon_river

Annisele wrote: »

A mortgage is just a loan secured on a property. If a bank won't lend to you before you buy the house, it's very unlikely to lend afterwards.

When you say your family are willing to buy the property outright "first", what exactly do you mean? Will your family lend you the money (effectively a private mortgage)? Do they have the cash to buy outright? Will they be taking out a mortgage in their own names as a buy-to-let?

I meant they will give us the cash to buy outright and the property will be under our names.

moon_river

Building_Surveyor wrote: »

Are you asking if you can take a mortgage out at a later date to repay your family?

Essentially yes, but like Poppy said, it looks like it's pretty unlikely that we can.:p

amnblog

If you have Income to pay a mortgage but cannot prove it are you saying it is not declared as income?

If you aren't paying tax your don't 'earn' the income for mortgage purchases. You can't have it both ways.

If it is declared and on your tax return it is useable for mortgage purposes.