Second residential mortgage to buy parents a house- is this possible?

jvint1

Hi - need some help please. Can I take out a second residential mortgage to buy my parents a house without having to get a buy to let mortgage? They are both over 60 and would live there rent free. They are renting at the minute to be close to our young family but do own a property about 50 miles away outright. Not sure if that makes any difference. Ultimately we would like to keep the property they own and continue to rent it and then buy them a property near to us without having to get a buy to let mortgage? Is this possible- any help much appreciated- Thanks

betmunch

The quick answer is yes.

Most lenders will not consider it, but theres still a few that would.

Go speak to a local broker who will recommend one to you following a full fact find.

Cheers

Wh05apk

Where will the deposit be coming from? that could be an issue?


Your income will need to be enough to cover both your current an the new mortgage.

jvint1

Deposit will come from me- Think we can find around 30%. Ok so im glad to hear it could be possible. Do you think the second mortgage rates will still be less than buy to let rates?

Wh05apk

You should be able to get normal residential rates, although the mortgage will almost certainly have to be repayment.

TrickyDicky101

Will you be relying on money from your parents to fund the monthly mortgage payments? Since I presume you won't be charging them rent (as then a BTL would be required) you will need to meet affordability out of your current income.

jvint1

Will definitely be repayment. Legally I will not be asking for any contribution from my parents against the mortgage. I currently have a 190k joint mortgage with my wife on a 285k property. We pay around 1k a month mortgage with first direct offset. We earn around 100k between the 2 of us a year. I am hoping we would be seen as being able to fund the second mortgage payments from our wages- What do you think?

TrickyDicky101

It's not just second mortgage payments though - it will be second lot of council tax, utilities and potentially maintenance amounts. Depending on how much extra you are seeking to borrow this could impact the affordability calculations.

jvint1

The place for my parents would not be to expensive around 80k to 90k mortgage outside of our deposit I think. I know the affordability rules have got alot stricter lately so guess I would need to do a full broker discussion to find out if the spare income we have would see as covering this

Wh05apk

On those figures, you should be ok.

Thrugelmir

jvint1 wrote: »

Legally I will not be asking for any contribution from my parents against the mortgage.

Call what you want. The HMRC will most certainly take a different view if the "arrangement" is contrived.