Implications of a friend buying a house for me

Mattygroves2

Your ex could also buy a BTL and let it out if he wanted to subject to satisfying a mortgage lenders requirements (25% deposit and rent covering 125% of the mortgage at 6%). His choice of lenders might be limited as he doesn't already own a property but I suspect he would find someone to lend.

If you read kingstreets answer he doesn't say you have to pay the £1,250 but you would need a surveyor to state that it would be reasonable to rent it out at that rate. If that's what that size of properties rent for where you are then it might work.

Any rent you pay him will be taxable at 40% and he would have to pay CGT (at 28%) on his profit when he sold it (or transferred it to you daughter if that is what he decides to do).

Much safer for both sides for you to become financially self sufficient based on your earnings, any benefits you are due and your maintenance. You need to think about what happens when he gets a new partner and a second family as it's quite likely they won't be happy with him subsidising his ex by charging a lower than market rent even if he is also supporting his daughter. Likewise would a new partner of yours be happy for you to be living in your ex's house on the cheap ??

Yorkie1

nicepurpleshirt wrote: »

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?



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

Thanks.

On the first point, you are missing the mortgage fraud issue still. If he applies for a residential mortgage, intending never to live there, then that is mortgage fraud.

Banks are getting increasingly clever about spotting people who don't live at places they've supposedly got a residential mortgage on. They may use credit reference agencies etc.

The chances of getting caught are relatively low, but you cannot assume that they are nil. If he does get caught then the consequences may range from not very serious (i.e. hike in interest rates - which may or may not impact on his financial viability if he cannot afford the raised repayments and your rent can't be put up) to really serious for him if he ends up with a fraud marker on the National Hunter fraud database.


On the second point, input the figures into this calculator at a range of interest rates and see what you get. Assume a mortgage of £225K and repayment of 25 years.
http://www.moneysavingexpert.com/mortgages/mortgage-rate-calculator

nicepurpleshirt

@Funny Old Game - thanks for your valued input

@MattyGroves2 - apparently you can't let to 'family' so that's why I've been looking at different angles....and FYI - he already has a new family - partner and baby and we all get on extremely well - it happens - and I can't imagine being with the kind of partner who would think I was living at my exes house 'on the cheap'.

@Yorkie - thanks.

OK - I'm going to retire before it's gets any more personal.
Thanks so much for your help (the helpful ones)

jonesMUFCforever

OP Google mortgage review - do you not read any papers?


I do not wish to be rude but this has no hope IMO of getting through the new mortgage interview.

jonesMUFCforever

nicepurpleshirt wrote: »

Thanks Citricsquid.

He earns 110K - let's forget the interest only mortgage then!
How much would approx monthly repayments be with the other kind then?

And if he took out a £220,000 mortgage on 110K, how much would he be left with - to be able to borrow...approximately...

It does not matter what he earns but what his outgoings are now and in the immediate future - they will also work out repayments at a rate of 7% (I think this is the amount) to see how they will cope with interest rate rises.

buglawton

Mortgage rules tightened today, there'll be a lot of scrutiny of Bling lifestyles. Anyway OP has exited.

ethank

Many Mortgage lenders do not consider maintenance as income.

You will not own the property unless you are also party to the mortgage, you can have mortgagees who do not own the property, but not owners who are not mortgagees.