Implications of a friend buying a house for me

nicepurpleshirt

So. To recap.
1. He can't get a BTL because he doesn't own a property already and if he could he need to find a 25% deposit and I would be paying over £1250 a month rent on the £250,000 house.
2. He can't get a residential mortgage and have me living there because he has to live there?
3. You can't get interest only repayments on residential mortgages anymore.
4. If he did get a BTL, I couldn't live there anyway because his daughter lives there (we're not and never have been married).

On another note, someone I know has a residential mortgage but lets it out to others and she doesn't live there....how come she's able to do this if she doesn't live there - the mortgage is small though is that why?

nicepurpleshirt

@getmoreforless - that would have been wonderful but I can't see how we could do this - as I assume the banks would be able to see that he lives at a separate address - any more ideas more than welcome though!..........

nicepurpleshirt

I hope you're all still there.
How about this scenario:

He buys a house to 'renovate' and doesn't live there to start with.
We move in and make the repayments using the maintenance money.
How are the banks to know that:
a) we are living there
b) we are paying him

Surely once a mortgage is agreed, they leave you to it as long as you don't fall behind with repayments?

Can I also ask again:
If he's earning 110K, buys a property worth 250K, how much is he left with to be able to buy a second property?

And again:
How much would the monthly repayments be on a 250K property (using a 10% deposit)

Thanks.

TBagpuss

How much he could borrow for a second property would depend on his outgoings (and those of his wife/partner, if they were buying jointly) as well as his income. How much equity there was in the house he already owned, and what his (legal) interest in that house was would also potentially be relevant, so it is not possible to say how much he would have 'left' in terms of borrowing for another property.

Monthly repayments on a £350K mortgage depend on the interest rate and the term. What rates he could get would depend on the LTV, and on his credit history.

Where did you get the figure of £250K from? How much house does that buy you? Would it be possible for you to consider a smaller / less expensive property?

What is your aim in getting him to do this? are you primarily concerned with finding somewhere for you and your daughter to live, or with having investments for your daughter's future? What is your mortgage capacity?

One optin might be to see whether you can get a mortgage in joint names, with a plan for you to then take over once your daughter is in school and you are able to start earning - again, this would be much more do-able if you are able to look at less expensive properties. And if you had a definite plan (and if necessary a formal agreement) which gave you (say) 5 years to get to the point where you got him off the mortgage (or sold the house if you couldn't) then the the fact that he would be limited in buying elsewhere might be less of an issue as he would know that there was a definite end date.

nicepurpleshirt

Thanks TBagpuss.

To answer some of your questions:
1. the 250K is the going rate for our area - anything less isn't worth contemplating unfortunately.
2. my aims in asking him are:
a) I want something more secure for us than renting - we have to leave our current property as the landlady is moving back in.
b) I am a SAHM at present
c) when I return to work I will only be able to borrow 65K max so this rules out the idea of buying him out in 5 years time...

I'm really stuck....

nicepurpleshirt

....can we buy using joint names and he not live there - I make the repayments with the maintenance?

pcgtron

nicepurpleshirt wrote: »

On another note, someone I know has a residential mortgage but lets it out to others and she doesn't live there....how come she's able to do this if she doesn't live there - the mortgage is small though is that why?

Nope.
The reason why is either
1) She lived there herself in the past, and now rents out the property with consent to let from her lender.

2) She is committing mortgage fraud and if the bank find out could ask her to pay back the mortgage instantly / and or take her to court

nicepurpleshirt

Thanks pcgton - (she used to live there) - so that makes sense.

Can't my ex buy a property, live there for 6 months and then let it out to us with his consent?

Annisele

nicepurpleshirt wrote: »

Can't my ex buy a property, live there for 6 months and then let it out to us with his consent?

It's not about his consent, it's about his mortgage lender's consent.

If he asks for consent-to-let after only six months, his mortgage lender is very likely to suspect that he wanted to let the place from the outset - and say no.

Funny_old_game

Why is this person trying to avoid normal rules and try different angles.

For a start the lender has people employed to do background checks. Secondly the solicitor checks policy and has right to inform lenders.

It won't work. If they are on £110 k a year, save up and buy outright. You may have had a chance a year ago, not now. Ridiculous. Whatever.