Remortgaging to get cash to buy another property outright

victhesmith

So we are looking to buy my parents-in-law's property as an investment and for them to live in the property for the rest of their lives.

Its valued at £70k and we are looking to remortgage our house taking it up to 74% LTV to get an additional £50k we need to buy their property outright.

Is this something which can be done? Do we need to tell the mortgage provider what we are doing or can we say its for home improvements etc.? We have been looking to remortgage anyway and take advantage of a 10 year fixed so it comes at a good time.

They wouldnt be paying us rent, but would pay all the bills etc. basically to help them out a bit so its not a buy to let or anything (and as its a cash purchase i dont think that matters anyway?)

Any advice much appreciated!

betmunch

You cant say the capital raising is for home improvements unless it actually is for home improvements.


Why wouldn't you tell them its to buy another property?

dimbo61

If you ask for £50,000 your lender will ask to see the plans and proof you have planning permission.
Renting to family is a big No No to some lenders.
If the In laws sell at discount to you it can be seen as deprivation of assets by the council if they try to claim housing benefits or go into a care home.
You would become a Landlord and must declare your income to the Tax man.
You must also maintain the property and do gas safety certificate, EPC, landlord insurance etc

Cornucopia

There is no real issue (with the Lender) about what the OP wants to do. The issue about renting to relatives applies to BTL, which this isn't. The OP is free to remortgage their own property for a wide variety of reasons, of which property purchase is one. (I doubt that the Lender will even ask for details of the other property). Do need to be honest, though.

The plan overall raises questions about the parent-in-laws' tenancy and the OP's future capital gains tax.