Right to buy mortgage and equity release

alx3365

My mum (primary tenant) have been granted the right to buy our council house at a 100k discount. We would then need to get a mortgage of another 120k to purchase the property.

I thought this would have been straight-forward but because my mum is 60, the maximum mortgage term most lenders will give me is 5 years (some might stretch to 10 years). Add to that the fact that I became a self-employed contractor 3 months ago and its been nigh-on impossible to find a lender, even though the discount could be counted as a large deposit.

An option that is open to me is to go to my immediate family members who do not live with me and raise the capital from their savings and just buy the property outright.

If I did that, that would leave me with a mortgage free property. However, I know that council have restrictions on what can be done with the property in the first five years and my question is this:

If I managed to pay off the purchase amount fully and one or more family members needed to be repaid their full loan amount in say a year or 9 months time, would I then be able to release equity from the property through a mortgage to do this?

I would also by that time have had a longer record of self employment and might actually be able to take out a mortgage, quite possibly one that is less then the 120k we would have paid in cash.

Hope that all made sense, and I appreciate any thoughts. Thanks!

alx3365

I should have mentioned that my mum and I are both tenants and she would need to be on the mortgage application should we want a right to buy mortgage.

I don't think we would need one if we bought the property outright and remortgaged (or mortgaged) at a later point, but pls do correct me if I got that wrong.

kingstreet

If you are a contractor, there are lenders who will take your daily contract rate, subject to the details.

An RTB for a recent contractor with an elderly applicant is going to be a challenge, so I suggest you speak to an independent broker.

The future remortgage will be just as problematic, so address the issues now.

Mokka

it is not true that your mother has to be on the RTB paperwork- she could sign the section on the RTB application (section 122) consenting to you buying on your own. However most lenders will have issues with someone living in the property and not being on the mortgage paperwork.