Mother wants me to take her mortgage on

BigBoss

Facts:

- Mum lives in a northern city and owns a house (she doesn't live in it)
- The house already has tenants
- I live in London
- Mum wants me to buy her house
- She is suggesting I get a buy to let mortgage because it is apparently a good time for that. But I would have to anyway (legally) unless I want to move back up north.

Can someone please help me logically figure out the benefits of doing this?

- Is now a good time to buy?

- Would I even get a mortgage since I declared bankruptcy in 2011 (discharged in 2012)? My salary would easily cover the cost of the house, particularly if it's buy to let anyway, the mortgage will be paid off by the tenants effectively.

Please help me out.

elsien

If it's such a good deal, why is she wanting to sell it?

BigBoss

I don't know where it says "good deal" anywhere in my post.

elsien

I presumed that was the reason you were looking to take it on. As no-one would be wanting to take on a mortgage for something that wasn't beneficial financially. If your mum is looking to get rid because it's not financially viable for her, that puts a slightly different slant on it.

pmlindyloo

How old is your mum?

Depending on this answer you may have to consider deprivation of capital if she requires a care home in the near future.

If this isn't relevant then you need to do some number crunching to see if this is a good investment.

Would you be buying at market price?

Have you got a deposit for your buy to let mortgage? Do you meet the criteria for getting a mortgage?

Research the loan to value criteria etc by doing some googling of various mortgage lenders or find good mortgage broker who researches the whole of the market (Martin has a good article on this )

If you can get a buy to let mortgage then you will have to look at the figures of renting it out - declaring tax, paying a managing company, repairs, responsibilities of being a landlord etc etc etc. and see if it is financially a good investment.

I think the 'is it a good deal' meant, why is your mum selling up if it is so lucrative'?

G_M

Do you want to move up north?

If so, is the property one you would want to live in? Would your mum sell it to you at a preferential price?

If not, do you want to be a landlord and run a business? If yes, what makes this property attractive as an investment? Why not get one local to yourself that you can manage easily?

And the key questions:

why does your mum want to sell?
why does she want to sell to you?

xylophone

Depending on this answer you may have to consider deprivation of capital if she requires a care home in the near future.

The mother wants the OP to buy the house from her - she does not live in it but lets it out and the house is currently tenanted.

She would therefore have the capital from the sale of the property after the repayment of her mortgage.

00ec25

BigBoss wrote: »

Can someone please help me logically figure out the benefits of doing this?

- do you want to become a landlord? Yes/No
- would you buy a property to let out in that location "up North" Yes/No
- would you buy THAT house out of all the others in that area? Yes/No
- do you have the cash to tie up in the minimum 25% deposit required for a BTL? Yes/No
- what is the yield on the current tenancy, how does that compare to your existing investment return?

answer no to any of the above then forget it. Answer yes to all then look at the financials ...

Mortgage_Mark_2

As a discharged bankrupt in 2012 you are going to struggle anyway, so if it's something you're serious about, speak with a broker quickly - many buy to let lenders are intermediary only, especially ones who might consider adverse credit.

Add in the fact that you're buying from family, potentially at less than market value, and you might struggle.

BigBoss

Is there any chance someone else could buy the house and hold it on trust for me?

Liliyanna

Please ignore if I'm wrong but don't you already need to be a homeowner to apply for a buy to let?

Lily x