Unusual First TIme Buyer Situation

Jasmine86

Hi,

I'm posting in order to gain more information, ideas and further insight from others. I'm looking to get a mortgage, however the situation I'm in is an unusual one to your standard buy. I'm single, 30 years old this year, with 1 dependent child. I work full-time (40 Hours) with a permanent contract, currently earning £7.20 hourly. I've been in this job for 2 years. And this year the work started the government pension scheme and I pay a couple of quid a week to that..

Now my living situation, I' live with a close family friend since I started this job. She is married but separated from her husband, he moved out and I moved in. They own the house outright and there is no mortgage left to pay. It's 3 bedrooms too so there was plenty of space for me ti move in and the idea was to give her moral company and allow me to save. At the moment in terms of in comings and outgoings, I have my earnings and working/child tax. I don't pay rent or contribute to gas/ele, I don't pay for a car either in finance. I have my usual phone and gym and I just buy food weekly when it's needed but with work I''m not home much anyway.

The house in question is purchased through full repayments and there is no loan / mortgage left to pay. My friend and her husband own the house 50/50. i was going to buy my own place, and my friend was going to buy out her husbands 50% share of the house and keep it for herself, but she's now changed her mind and now wants to sell the house in order to fully move on with life. I love the house but with the I reckon it's very unlikely that I would not get the full mortgage to buy 100% right now. At this point she has given me an idea, suggesting that I could buy out the husband by going for a part mortgage, and then buying her out over the course another 2-3 years as she is prepared to wait. So I'm hoping to be upfront with the bank and suggest a 2 part process, first I want to get what I can with the purpose of paying off the husband the now and what I need is £60k to do that in order to gain 50% ownership. And then in 2-3 years time, me and / or my boyfriend who has only just started self-employed (giving him years to get new accounts under him) buy out my friends share. We have between us the now £20,000 to utilize as a deposit but the last resort would be to use the full amount

So in an ideal world giving me 50% the now and then my boyfriend 50% in 2-3years time. It gets us on the property ladder, we can then move in together to a 3 bedroom house that's walk in condition and set for our future where we won't need to move again. Another scenario would be that I might even be offered more than what I'm expecting and needing, I'm only expecting the worst but they might offer £80k with a deposit, giving me more than the 50% I need right now to pay off the husband but I'm told to take as much as I can get, leaving part 2 easier in the long run.

I just worried about most about credit rating and being accepted for what I need. I've always had a job and income, but my credit rating was poor 3 years ago, I got knocked back for a £10k car, mainly because I was in my overdraft with the bank. But now I feel I'm in a better situation, permanent contract rather than temporary, I've turned my bank statements in the right direction, I' got no outstanding credit, I've tried to build my rating up by using my interest credit card and paying it off, then being offered interest free cards and paying it off and increasing my limit, I also took £1k loan for furniture at Harveys and paid it off. So with a better credit and I have little outgoings each month and surely they must include the value of the house I'm trying to part buy as security for them?

Now this is only from the drawing board. I'm looking for outside perspective. Is it possible to part buy? Do you reckon I'm in a position where I could get what I need? -- I'm going to try book an appointment with the financial adviser at my BOS bank, although I'll prob need to wait.

Thanks for your time.
- Jaz

foxy-stoat

You could get a joint mortgage with your close friend for £50,000 using £10,000 deposit (assuming this was your money to start with), pay this to the ex husband and in a couple of years remortgage with your boyfriend and remove the close friend's name from the mortgage, as long as the affordibility works out ok. Your close friend would still have to live at the property.

Work on the basis that if your close friend wants to be paid out in 2/3 years and for any reason(s) you and your boyfriend cannot meet the affordibilty then you would have to sell and buy somewhere you can afford.

You would need a Deed of Trust drawn up stating the buying and exit plans so everything knows where they stand, best and worst cases.

Jasmine86

Thank you for your reply.

I understand the need to sell up and also deed of trust.

However, whats the difference going between a joint mortgage at exactly 50% for what I need minimum right now or going for a part mortgage in terms of getting as much as possible right now? - beside the risk of not getting more.

Also, why Remortgaging? Is that to maximise what my close friend gets. Do you need to Remortgage or could I not just own 2 parts?

Just curious. It's tricky talking fiqure and percentages together.

The proposed offer I was given was to be consented to buy the house at £120,000. Get at least half right now as the minimum to essentially pay off the husband. And in 2-3 years time get part 2 for X amount to make up the total 120k. May that be 60k or 40k

MortgageMamma

Its a remortgage because she is not selling the property, she is remortgaging it, removing her husband and adding you to the mortgage.

In my opinion you should see an independent whole of market adviser to find the best way forward and check your affordability before you proceed further.

Verix

I agree with the others that this is definitely a remortgage. Lenders don't want there to be two different mortgage on a property to two different people.

I think one issue is whether your friend would want to do this? By her remortgaging the property with you would she be able to afford to buy a new property for herself effectively servicing two residential mortgages? If she really wants to move she could rent her property to you until you and hubby have enough saved up to buy it off her.

It does seem a bit tricky so definitely worth all parties speaking to an adviser.

Jasmine86

She's not in any hurry to move out really
, she would like to move on and get her own plan but it's not essential this year. What is essential is buying out the husband this year, with his retirement post summer he wants to buy. The situation is not sword like at all, everything is calm and peace, it's just a marragie that didn't work in the end.

So the opportunity was for me to somehow buy him out to start then buy my friend out eventually with her being prepared to wait.

So the remortgage part would be part 2 with my boyfriend? But would that mean we still get the house for £120,000 ?

In terms of financial advisor, I didn't realise you got different types like restricted. So if I'm looking for independent whole of market, will I get this at my bank of Scotland or is it recommend I go to elsewhere? - I checked unbiased and the closest independent mortgage advisors are around 30miles away.

Thanks again

foxy-stoat

Jasmine86 wrote: »

Thank you for your reply.

I understand the need to sell up and also deed of trust.

However, whats the difference going between a joint mortgage at exactly 50% for what I need minimum right now or going for a part mortgage in terms of getting as much as possible right now? - beside the risk of not getting more.

Also, why Remortgaging? Is that to maximise what my close friend gets. Do you need to Remortgage or could I not just own 2 parts?

Just curious. It's tricky talking fiqure and percentages together.

The proposed offer I was given was to be consented to buy the house at £120,000. Get at least half right now as the minimum to essentially pay off the husband. And in 2-3 years time get part 2 for X amount to make up the total 120k. May that be 60k or 40k

You need to be clear from the start -

Agree the house value is £120,000
Agree that you and friend take out a joint mortgage and pay the ex husband £60,000
You both pay the mortgage, 50/50 - you both live there.
At the end of the 2nd or 3rd year agree the property value again
Get a joint mortgage with your boyfrield for the property value and pay your friend 50% to remove her name from the mortgage and deeds.

You will have issues if the house value goes down in 3 years - your friend will not get her £60,000, or if the house value goes up by too much so you and your boyfriend cannot afford to buy it.

The chances of a major shift in value is low but property value can go down as well as up.

Also if there is any major work that is needed that is not covered by insurance, you both will be liable for this.

Jasmine86

Verix wrote: »

I agree with the others that this is definitely a remortgage. Lenders don't want there to be two different mortgage on a property to two different people.

foxy-stoat wrote: »

Agree that you and friend take out a joint mortgage and pay the ex husband £60,000 You both pay the mortgage, 50/50 - you both live there.

A remortgage to me means a different / additional mortgage, or as such moving from one lender to another lender.

However, I want to make sure we are on the same page here. I'm not sure if I was clear enough in my original post in saying that the house in question, where I'm living and want to buy, has already fully been purchased through full repayments and there is no loan / mortgage left to pay. My friend and her husband own the house 50/50.

Essentially there is no other lender, the house is owned and all I want to do is buy the house off them but in 2 stages. Part 1 now in order to pay off the husband first then part 2 to buy them both.

I think this makes the situation a little less complicated right?

antrobus

Jasmine86 wrote: »

...However, whats the difference going between a joint mortgage at exactly 50% for what I need minimum right now or going for a part mortgage in terms of getting as much as possible right now? - beside the risk of not getting more....

I don't believe that there is such a thing as a "part mortgage". A lender can't repo half a house, it's all or nothing. If you and your friend are going to be 50:50 owners then it is going to have to be a joint mortgage.

P.S. There is nothing particularly 'unusual' about your situation either. It's quite common for a two people to buy a house together, after which the relationship founders, one person leaves, and the person who stays moves in a replacement, and the new couple then want to buy out the ex.

The only difference in your case, is that you are not in a relationship with the person who stayed.

I'm sure that any have decent mortgage broker can run through the numbers and tell you whether or not your plan is a goer.

antrobus

Jasmine86 wrote: »

...I think this makes the situation a little less complicated right?

I think it makes it a lot more complicated.

A lender might well be happy to lend £60k on the basis of buying out the ex-husband's share. But if they know that the plan is for you to buy out the ex-wife as well, that adds a layer of risk from the lender's point of view.

Thrugelmir

You cannot obtain a 50% mortgage. Your friend will also need to be party to the mortgage. I doubt she'll be happy to do so. As restricts her options in terms of moving on with her life.