Renting to family

Jojo84_2

My mum currently has a house soe has to sell (she no longer lives there) to pay off her mortgage (it was an interest only mortgage). It's been in the market fit a year,without any reasonable offers. Because,she needs to pay it off by November she has been advised to put it on the market to let and get a buy to let mortgage.

Myself and my husband live in a 2 bed rented property and both have Stable jobs, we don't claim housing benefit or any other kind of benefit (apart from child tax credit). We're expecting another baby and looking for another rental but nothing is within in our reach financially until I'm back to work after maternity leave.

My mum doesn't want to rent to a stranger and has,suggested she rents to us for 125% mortgage repayment. We would do it all.legally with deposits and tenancy,agreements etc... this,would be below market value

Question is, will she be likeky to do this? Also what will happen re:tax as she will only be making very little profit which will.likely go on landlord insurance.

I. Dont need any comments about it being a bad idea to let to family etc... I only require facts.

After 5 years we would be. Likely in a, position to buy the property from them.

marksoton

Jojo84 wrote: »

I. Dont need any comments about it being a bad idea to let to family etc... I only require facts.

That is a fact and with most lenders a no.

Does she have a vehicle to pay back the interest only mortgage?

Jojo84_2

My question was about facts, not opinions.
I know not all lenders allow it, my question wAs whether it's possible or not.

There really is no reason to be rude about it.

Yes, she has a vehicle to pay back the mortgage in 2-3 years.

G_M

Jojo84 wrote: »

Question is, will she be likeky to do this?
We have never met her so have no idea what she is likely(likeky?) to do.

Also what will happen re:tax as she will only be making very little profit which will.likely go on landlord insurance.
She will have to declare the rent as income, and offset her allowable expenses like insurance, mortgage interest etc, and then calculate if any tax is due, on her Self Assessment Tax form each year

I. Dont need any comments about it being a bad idea to let to family etc...
Forgive me but I think you do need those comments.
Would she be willing to evict if for some reason beyond the tenant/relative' control the rent dried up (redundancy, sickness, whatever)?
I only require facts.
It is a fact that rent cannot be guaranteed. From anyone.
It is a fact that the mortgage still need to be paid.
It is a fact that eviction might be the only option.
It is a fact that evicting a relative can really f*** up family relationships....

After 5 years we would be. errr. 'be...?'

Likely in a,
in a comma?
position to buy the property from them.

Ah!

Most lenders prohibit letting to family under the terms of a BTL mortgage.

marksoton

Jojo84 wrote: »

My question was about facts, not opinions.
I know not all lenders allow it, my question wAs whether it's possible or not.

There really is no reason to be rude about it.

Yes, she has a vehicle to pay back the mortgage in 2-3 years.

I gave you a fact. Silly poster...

Jojo84_2

t to answer your questions
1: clearly I meant would she likely be able to do this, not likely willing to.
2: thought that was the case
3: I don't need to forgive you, I've read enough threads with this view so I don't need to hear it. She would be willing (and I would deserve it) to evict, but I would likely deal with the situation before eviction was needed. I have entered into financial contracts with her before.

4: don't be rude

5: I was intending to say that we would be able to buy it after 5yrs... clearly this was an exciting error and insure you understood. Which brings me to my next point

6: don't be a grammar Nazi, it is very rude and rather immature.

Pixie5740

Facts:

1) Lenders tend to require people to have regulated BTL mortgages to let to family.

2) Your mum will need to declare the rental income to HMRC and may open herself up to CGT when she eventually disposes of the property.

flashg67

Just to confirm, I have 2 BTL mortgages and the terms specifically exclude renting to family members. Not to say they aren't available, but are not the most common.She could ask her current mortgage provider for consent to let though.

marksoton

Jojo84 wrote: »

t to answer your questions
1: clearly I meant would she likely be able to do this, not likely willing to.
2: thought that was the case
3: I don't need to forgive you, I've read enough threads with this view so I don't need to hear it. She would be willing (and I would deserve it) to evict, but I would likely deal with the situation before eviction was needed. I have entered into financial contracts with her before.

4: don't be rude

5: I was intending to say that we would be able to buy it after 5yrs... clearly this was an exciting error and insure you understood. Which brings me to my next point

6: don't be a grammar Nazi, it is very rude and rather immature.

Fact: JoJo is a nono...

Good luck, no really...

marliepanda

Jojo84 wrote: »

5: I was intending to say that we would be able to buy it after 5yrs... clearly this was an exciting error and insure you understood. Which brings me to my next point

6: don't be a grammar Nazi, it is very rude and rather immature.

5. It wasn't that exciting really, and I'm not sure what it has to do with insurance?

6. Rude: no. Immature: quite the opposite!

Amber_Sunshine

OP, people are quite rightly trying to point out the pitfalls of your mum's idea. There is no need to take offence; both you and your mum could be taking risks by proceeding with this plan. That is not to say it is completely impossible, but you all need to make sure that you are fully informed. For example, would you be entitled to housing benefit if your husband lost his job? Is the house not selling because it is overpriced?

You really should not ask a question on a public forum if you only want to hear a certain answer.