Likelihood of mortgage for below market value

2ran

I'm currently a student at uni but I have my job lined up for September for £26k a year (contract signed and accepted).

I have around 15k saved up and would like to buy my dads flat off him for 180k the flat itself is worth around 300k (That's what the neighbours one recently sold for). The 180k comes from the remaining mortgage left on the property so he would literally be selling it to me just to cover the cost of his mortgage. He will be moving abroad and doesn't want the hassle anymore.

I don't mind buying it as either a first time buyer and living in it myself or as a buy to let and renting it out either way is fine for me. If I do rent it out I can get £1400 per month.

I see this 5X salary only around which when i look at it means i would need a larger deposit but does the fact that i'm buying it for less than its worth also count as part of the deposit?

ch3101

The LTV is based on how much your have borrowed compared with the lower value of either the purchase price or lender valuation.

Hence you'd still be at >90%.

I think you'll struggle to borrow 165k while on 26k a year

Annisele

ch3101 wrote: »

The LTV is based on how much your have borrowed compared with the lower value of either the purchase price or lender valuation.

That's usually true, but with a purchase at undervalue from a close family member some lenders are happy to take that as a gifted deposit.

However, I completely agree with your other point - £180k on £26k a year is far too much. It's nearly 7 times income (an income that OP doesn't actually have yet, and might not get despite the signed contract). That's difficult-to-impossible on a residential basis.

Many lenders don't lend to first time buyers on a buy-to-let basis (in case the buyer is trying to get round affordability calculations). I'm also not sure if the gifted deposit would be accepted by a BTL lender.

OP - the gifted equity might therefore count as part of your deposit, but you'd still need enough cash of your own to take the loan down to 5x income (or some other more reasonable figure).

Dave_the_Ginger_Cat

You may also need to look at deprivation of assets if your father is likely to need medical care in the future, or in consideration for IHT. He may be young and fit now but you need to take this into account

You won't get that income multiple, and a btl mortgage would be challenging. Suggest see a good broker, but they may tell you the same thing

getmore4less

The lending level required is on a very high multiple.

What's the likelihood of increased salary(some jobs have rapid growth)

What's the current mortgage deal your dad has.

Can you afford to pay that?

Does the flat have room for lodger(s)?

Any other sources of money?

How quick does dad want to move and/or get rid of this mortgage

2ran

getmore4less wrote: »

The lending level required is on a very high multiple.

What's the likelihood of increased salary(some jobs have rapid growth)

What's the current mortgage deal your dad has.

Can you afford to pay that?

Does the flat have room for lodger(s)?

Any other sources of money?

How quick does dad want to move and/or get rid of this mortgage

It is an engineering job so I hope for the salary to go up by a bit each year.

It is an interest only mortgage so even though I can easily cover the payments. I'd rather be paying off a repayment mortgage.

Gary123456790

26k is around £1,636 a month

180k over 25 years at 4% is £951 a month

How much is the council tax, water, gas, electric, TV license, internet, food, petrol & car repairs, and budget for maintenance on the property?

Sounds like it is a bit too much on 26k im afraid.

Gary.

2ran

What if i rent it out instead of living in it then the rent could easily cover the mortgage and my wages could cover any periods where the property is empty

CKhalvashi

2ran wrote: »

What if i rent it out instead of living in it then the rent could easily cover the mortgage and my wages could cover any periods where the property is empty

What happens when you get 6 months of no tenant?

Sorry if I appear blunt, but I've had to face this in the past.

CK

getmore4less

2ran wrote: »

It is an engineering job so I hope for the salary to go up by a bit each year.

It is an interest only mortgage so even though I can easily cover the payments. I'd rather be paying off a repayment mortgage.

You won't get interest only.

Untill you earn more I don't think you can't afford it unless you can gte lodger income.

I would check the wage progression some parts of engineering are not rapid progressions.

Id the place suitable are for job hunting/progression in your field.


What I was heading towards was could you cover the mortgage till you can afford it but that might take a few years and would that fit in with dads plans.

Let_Us_See

With the proposed equity within the property you could find a lender willing to provide interest only.......two immediately spring to mind. However, this is immaterial as your income will not meet any lender's affordability criteria.