Buying family members house before repossession. Help!

Dean_j_2

Afternoon all

I need some advice as to what to do about buying a property from a family member before it's repossessed.

Is this at all possible? There's roughly 100k left to pay on a 250k valued property, but this family member has hit financial difficulties and has fallen a fair bit behind on payments (believed at the moment to be near on 10k!), so I'd like to buy the property from them. Can I do this once when the mortgage company are seeking to repossess the property? Could I get another mortgage for this property whilst I already have one? The mortgage is too much for them to cope with after a couple of re-mortgages (if that's what they're called) in the past, before this particular recession. My idea is to get a mortgage on what's owed, which hopefully will reduce the monthly repayments, and theoretically rent the property to them.

I can just imagine it's not as simple as this, but if anyone can offer any advice, or points I've missed, I'd be very appreciative.

Thanks in advance
Dean

G_M

If the repossession has not yet gone through, the owner is free to sell, either to you or anyone else.

Provided he pays off the outstanding balance on the mortgage.

Even if a court date has been set for the repo hearing, if you attend court and tell the judge you are going to buy the property and the mortgage will be paid off, the court is likely to grant you a specified period to do this before granting repossession to the lender.

PasturesNew

You can buy it - if you have cash - at any price agreed between you, so long as the mortgage and any other charges on the house can be cleared.

You can buy it by raising a mortgage on your house and paying cash - if you have an income large enough and are mortgageable and depending on how much your house is worth.

Getting a mortgage to buy it from him, with him continuing to live there, isn't 100% impossible, but it does bring new problems into the equation. e.g. getting any mortgage where the current owner will continue to live.

Also, if he might claim benefits in the future, this might affect how much rent he can afford to pay you (IF he can get his rent paid, as previous owners of a house usually can't).

So, you need to start giving more details, so your options can be thrashed out, named, nailed or forgotten.

Dean_j_2

Thanks for the replies.

I'll have to get specific numbers, as to how much exactly is owed on the mortgage, but it is pretty much 100k, and they are behind by between 8 and 10k.

I earn very nearly 50k before tax. My mortgage at the moment is interest only and 360pm. There isn't much equity in my property at all. It lost money and has probably made that back now, with a little bit on top.

I don't want to involve my current property in the purchase of this property if I can help it. Especially as there's nothing to take out of it.

I know there's more to it, but with an estimated 40% LTV, I thought I'd be able to get another mortgage on this on my modest wage, or am I way off track here?

The family member in question will be good for the rent (as hopefully it should only be 60%ish of what he pays now), and I'll help out if I can. We just don't want to lose this property as they've put so much into it over the years to lose it so easily.

G_M

Ah! So you are buying as a BTL?

You want to be a landlord?

Remember Capital Gains Tax. And Income Tax. And higher costs of a BTLmortgage. And all the Regs around letting property. And restrictions there might be on letting to family.....

[FONT=&quot]New Landlords[/FONT][FONT=&quot] (information for new or prospective landlords)[/FONT]

caprikid1

In case I missed something.


The house is worth £250K
Mortgage is £100K and 10K in arrears.


You want to buy the house for £110K Mortgage plus arrears and rent it back to them ?


If I am right your quite a special individual looking to profit over £100K on their misfortune. Apologies if my understanding is wrong.

Dean_j_2

I'd be looking to buy it for whatever is owed on it. Not looking for any financial gain out of this at all. Whatever actions we take will be so they do not lose the house. This is family after all. If I can go ahead with this and I'm able to get another mortgage, I'd hope it would be a smaller amount per month, and if I need to contribute, I will so payments are met and made on time

Cheers again for your replies

Dean_j_2

caprikid1 wrote: »

In case I missed something.


The house is worth £250K
Mortgage is £100K and 10K in arrears.


You want to buy the house for £110K Mortgage plus arrears and rent it back to them ?


If I am right your quite a special individual looking to profit over £100K on their misfortune. Apologies if my understanding is wrong.

Very much misunderstood mate. I'll pay as much as they need me to contribute.

No one knows me here anyway, so I might as well say it's my parents who are in trouble. Very badly hit by the economic downturn.

I'll be left the property eventually anyway. I don't fancy my parents losing all they've put into the place. I'll help in every way I can.

Cheers for your replies again guys

ETA, I reckon if I can get a mortgage, it'd be on a far better rate than they could get. I don't think they'd even be considered for a remortgage.

Morglin

You may also need to be aware that, if you are intending to be your parent's landlord, and charge them rent, (which would be understandable), they probably won't be able to claim housing benefit, if they ever need to:

http://england.shelter.org.uk/get_advice/housing_benefit_and_local_housing_allowance/what_is_housing_benefit/housing_benefit_if_renting_from_a_family_member

Lin

Ms_Chocaholic

Wouldn't you be better to give them the £10k to cover the arrears. It may be easier and quicker.

Dean_j_2

Ms_Chocaholic wrote: »

Wouldn't you be better to give them the £10k to cover the arrears. It may be easier and quicker.

Yes of course that'd be easier, but they will still struggle with the size of the repayments they still have to make. Of course we will sit down and see what we can save through their monthly bills etc, but if we can get a mortgage at a better rate, with someone (me) with a much better credit history, then we will certainly look down that route.

We'd in affect, be looking to make their bills manageable so they can leave me something at the end, so to speak.