Looking for some general advice

hanstorini

Hi, my partner and I are first time buyers and I'm finding the whole thing a bit scary, so it would be great to get some advice from people who know what they're talking about in an experienced way rather than the reams of advice on websites.

My dad recently came into a large sum of money and we (my mother and I) have pushed him to invest half of it as they have an interest-only mortgage that ends in 7 years, and frankly he is terrible with money and if he doesn't it will just disappear (living costs - he's self employed, and general overspending).

To start with we have looked at a few properties at the amount he was willing to invest with the view that my partner and I would live in it and rent it from them, but we live in the Hampshire/West Sussex area and the village where I live has a 1 bed on for £400k and a 2 for £450k (neither have sold yet, surprise surprise) so for £170-180k we haven't found anything that we like, in the right area. I work locally but my partner commutes to London, so we really would like to move a little further up, and at the moment down is the only option without living in a shoe box.

So we're looking to top it up with a mortgage for me and my partner, ideally £50k. This doesn't seem to be an impossible idea - my dad doesn't want any rent, so the mortgage and general house costs would be the only thing to worry about. We both have (according to Experian) excellent credit scores, my score is technically worse but has no negatives - I have been trying to build it up since mid-way through university. His score is better but he has a 3 negative points, mostly because he's not really ever borrowed any money, but we're both firmly in the green.

I have used numerous calculators on the internet and they all say we would borrow anywhere from £70-£140k, and we don't want that, so I'm hoping that £50k would be more likely at only 30% LTV.

So really, my questions are:
- I know that AIPs are a good idea in some respects, but a lot of people seem to speak of them as unnecessary too, so is this worth looking into or not?
- We will be doing a Tenancy In Common, would this change the circumstances? Our deposit is still 170k, just that 70% ownership will be my parents and the 30% ours. Joint ownership mortgages seem to only involve everyone, and we firmly do not want to bring anyone else into this if we are able to borrow money.
- (I'm aware that perhaps I need to post this in the Home section but) does a Tenancy in Common affect the bank or would that simply be something we all sign and have the solicitor do?
- £50k over 7 years sounds best in the terms of us knowing we will be selling at that time, but 10 years creates a better affordability, so how does that work? Obviously people buy and sell before a 25 year mortgage is up, and affordability seems to be what the banks will be looking at.

Thanks guys, I'm a rambler

amnblog

What you are suggesting is fraught with complications, legally, tax wise, and lending wise.


The smart thing would be to get some personal advice for you and Dad.

KRB2725

Why doesn't your Dad pay off a chunk of his own interest only mortgage? If your Dad doesn't want any rent from you then he isn't really investing the money, just tying it up.

Unless I've misunderstood, he will continue to pay a mortgage whilst you get to live rent free? Good deal for you, but doesn't seem to make much financial sense.

Let_Us_See

I suggest the first "investment" your father should make is to redeem his own interest only mortgage.

Your other thoughts are all over the place, and I suggest the priority is for your father take financial/investment advise from at least two financial advisers (I am sure their advice will differ), before considering your own residential situation. One step at a time.

Thrugelmir

hanstorini wrote: »

have pushed him to invest half of it as they have an interest-only mortgage that ends in 7 years,

Then repay the current mortgage.

Job done.

Foxy-Stoat_3

Best things you can do is;

1. Leave your Dad to invest his money by taking some proffessional advice

or if he wants,

2. He should gift you whatever you need to get a 75% LTV mortgage. Do a Deed of Trust whereby if the relationship between you and your partner ends and the house has to be sold that you get back your Dad's money, so you can give back to him. If he wants to "make" 1% on the money per year then set up a direct debit and buy say £100 of Premium Bonds a month.