Joint ownership with relative with equity, part mortgage – advice please!

cr78_2

We currently rent for £700 a month in a nice area in the south of england. We can’t currently get a mortgage that would enable us to buy somewhere as big as we are renting, in this area. We’re happy renting but are concerned we’re not ‘on the ladder’ / investing in the future.

My aunt who is 60 has just sold her house and will have around £140k to spend. She would like to move down near to us but £140k doesn’t buy very much.

A smaller house next door to us may be coming on the market , and we know the owner.

My idea is for my aunt to buy it, with us taking out a mortgage to cover the difference in value between her 140k and the value of the house. So lets say the house is 200k, my aunt pays £140k and we get a mortgage for £60 to cover the shortfall. We could afford these repayments and our rent.

My aunt gets to live in the house and we own 30% of the equity. She gets to live somewhere nice which she can’t afford and we’re getting some equity in a house. If this then goes up in value we’ll have some investment / equity to enable us to put down a deposit somewhere in the future.

I’m not very financially minded so was after some advice about whether this idea stacks up.

Would it be a good investment for us?

What are the potential pitfalls?

Does this sort of arrangement have benefits / is it very common?

Any advice gratefully received.

thanks

mrginge

You can't get a mortgage for part of a house. All of you would have to be named on the mortgage and her age would likely limit the term even if affordability stacked up.
You may also struggle in that you don't live in the house.
Sounds like a total non-starter tbh.

cr78_2

thanks,

but we would be seeking a mortgage for the whole house, but just borrowing 60k, my aunt's equity effectively forming the deposit.

Surely it is possible to get a mortgage on a house and not live in it? buy to let for eg?

ognum

cr78 wrote: »

We currently rent for £700 a month in a nice area in the south of england. We can’t currently get a mortgage that would enable us to buy somewhere as big as we are renting, in this area. We’re happy renting but are concerned we’re not ‘on the ladder’ / investing in the future.

My aunt who is 60 has just sold her house and will have around £140k to spend. She would like to move down near to us but £140k doesn’t buy very much.

A smaller house next door to us may be coming on the market , and we know the owner.

My idea is for my aunt to buy it, with us taking out a mortgage to cover the difference in value between her 140k and the value of the house. So lets say the house is 200k, my aunt pays £140k and we get a mortgage for £60 to cover the shortfall. We could afford these repayments and our rent.

My aunt gets to live in the house and we own 30% of the equity. She gets to live somewhere nice which she can’t afford and we’re getting some equity in a house. If this then goes up in value we’ll have some investment / equity to enable us to put down a deposit somewhere in the future.

I’m not very financially minded so was after some advice about whether this idea stacks up.

Would it be a good investment for us?

What are the potential pitfalls?

Does this sort of arrangement have benefits / is it very common?

Any advice gratefully received.

thanks

What happens when your LL wants your house back and you have to move miles away from your aunt?

Could you club together and buy a house with annex for all of you?

Tixy

If all 3 of you will own the property then all 3 of you will need to be named on the mortgage.

Even if you can find a lender prepared to offer a mortgage to a 60 year old and for 2 of the owners not to live in the property is your aunt happy to be jointly liable for the mortgage on the property?

Is she happy that if you run in to financial difficulties/have a change in circumstance that she would have to make the mortgage payments herself? and is she in a position to do so? is she prepared that her home could be repossessed if you cannot keep up with repayments on the mortgage?

TBagpuss

As others have said, the issue is that lenders will generally require all owners to be on the mortgage, and the length of the mortgage is normally limited by the age of the oldest borrower, so your aunt's age would significantly limit your borrowing capacity.

Buy to let with the house in your name has obvious risks for your aunt, plus there may be restrictions about renting to a relation.

cr78_2

ok thanks for the advice guys. sounds like it isnt a great idea. back to the drawing board!