Property for dad, but mortgage in my name

Johnumb

Background:

My dad has £40k in the bank from a house sale. He has no other assets and is currently renting a flat at about £900 p/m. He does shift work earning around £1,400 p/m net. My two brothers (in their 20s) also live with him in the flat (for now as a temporary arrangement following the sale of the family house) and contribute to the rent.

My dad would like to buy himself a flat using the £40k deposit. Given his salary and that he is in his early 50s, the bank we met with say they could lend him around £70k on a 15 year mortgage. However, in the area where we are a one bed flat will cost at least £200k.

Question:

So the way I see it, my dad can either:

a) continue renting and saving for the next few years and we can worry about the long term future later!

b) move away from our current area and buy a flat for around £120k with an affordable mortgage. (he is dead set against moving away from us, so this is not really an option )

c) me and one of my brothers use the £40k deposit buy a flat with a joint mortgage in our names (we could get a 25 year term and could borrow enough to afford a flat in our area), and my dad lives there and pays the mortgage. It would cost him around the same he is paying in rent now. I am happy to go ahead with this but my only worry is.. what happens in a few years time when I am ready to but my own place and need to take out a mortgage in my own name? Can I transfer the mortgage to my dad's name?

d) We convince a bank to lend my dad £160k. Me and my brothers would be giving him a bit toward the repayments each month. A couple of friends have told me to try a mortgage broker, but given my dad's situation, would we have a chance of getting him a mortgage for that amount?

Apologies if this is a bit all over the place. I am completely new to the forum (or any forum!) but I would be so grateful for any advice.

Thank you

~Beanie~

c) You can't transfer a mortgage to someone else, they would have to apply for a mortgage in their own name. If your dad can't get the mortgage he needs now, he is even less likely to get it further down the line. So yes, it would affect you if you wanted to buy your own place as you would have to earn enough to pay both mortages.

d) Assuming he is earning c21K then he would be asking for almost 8x his salary, which is never going to happen.

Looks like a) or b) are his only options.

Pixie5740

A) Can he rent somewhere cheaper to help save more money? Although at this stage the longer he saves, the lower the mortgage term might be due to his age. I suppose he could continue to rent for the rest of his life, that is an option many people are facing.

This is absolutely an option if he wants to be a home owner and can't afford anything in the area he currently lives.

C) This option won't be as easy to do as you think. You are your brother will effectively become your father's landlord and since he is a close family member you could well be looking at getting a regulated BTL mortgage which aren't always easy to come by especially if your father is providing the deposit. You'd really need to see a mortgage broker about this for more advice.

D) You won't know unless you speak with a mortgage broker. Lenders have tightened up their criteria for mortgage lending so you might not find it all that easy to convince the bank to lend to your father.

harrys_dad

He may want to own his own place but he clearly cannot afford it where you live. None of the scenarios you describe will be able to get round this in any way at all.