Advice on Best Mortgage Option for an Opportunity we've been offered.

MQ57

I'll try to keep this story brief...

Points to note:

• 7 years ago we went bankrupt (we are now out of bankruptcy)
• We are currently still renting
• We are saving for a deposit for our own house... and expect this phase to last a good few years yet.

We have some very dear friends that have made us an offer that is hard to refuse... but we are not sure of the best option:

Our friends are a lot older than us, have no other next of kin, are reasonably well off but could do with a nice 'top-up' on their money to keep them going... to have some fun, while they still can. They considered selling their home to one of those companies that give you perhaps 50% worth and still live in it until the inevitable. The gentleman wants to go down that route, the lady begrudges allowing 50% of it to be gone to a company, but wants to do something....

Hence...
They have offered us the same opportunity, if we want it.

So, for the sake of figures... their home worth say 160-170k - would allow us to buy for say £100k on the understanding its theirs until they both pass.

We have at least 10k now to put towards this.

We have considered an interest only mortgage so that we would continue to pay our rent as an initial thing and continue to save, perhaps now towards the pay-off of this house, later.

Contracts etc would have to be drawn up to protect the current owners of course...

My questions are many, but e.g.:

Is there a way to do this already legally available?
Is the best way to buy (as normal) / then, at same time, put contracts in place for both parties?
We would be getting a mortgage on house say 165k, with 10k deposit, mortgage 90k, over around 15 years.... is this tricky in any way.

Both couples are happy in principal of course - but equally we are more concerned that they are happy in their decision.

We've had an awful few years - so this opportunity is overwhelmingly exciting - and its also exciting for them as they get to keep their home and have the money they need for as long as they want.

Legally, we'll get this right - but going down the best mortgage route is all important to us.

Any help would be welcomed.

betmunch

Doing this for family is easy enough, however for friends I don't think it's going to be possible I'm afraid.

Certainly not on interest only.

I can think of 2 lenders worth asking, but would expect them to say no.

Best thing to do is have a full fact find done with a broker who will be able to give you a definite answer

MQ57

Hi Betmunch,

Thank you for your reply.

Just so I'm clear of what you are saying; buying the house on 'these grounds' isn't something the majority of mortgage company's would be willing to provide a mortgage for.. is that correct?

Thank you for your time - much appreciated.

betmunch

MQ57 wrote: »

Hi Betmunch,

Thank you for your reply.

Just so I'm clear of what you are saying; buying the house on 'these grounds' isn't something the majority of mortgage company's would be willing to provide a mortgage for.. is that correct?

Thank you for your time - much appreciated.

That is correct I'm afraid.

I fully expect it to be all lenders, but haven't ever asked the question so I can say 100%

MQ57

Thanks Betmunch,

Appreciate your time letting me know this. I'm going to have a chat with a solicitor friend to see if a secure contract could be set-up out outside of the mortgage that would be able to secure the agreement between the two parties if we was able to get this organised.

Seems such a shame doesn't it if the money is no problem that you can't buy a house and do what you want with it (within reason of course) especially as the mortgage would end up about 50% of the house value - seems like a good catch for a mortgage company - but I know it isn't that simple.

Again, thank you. I really appreciate your help

kingstreet

This will fall-foul of sale & rentback rules.

No lender will accept the former owners continuing to reside.

AnotherJoe

This is a terrible idea. Here's an extreme example of where it went wrong
http://articles.chicagotribune.com/1995-12-27/news/9512280029_1_jeanne-calment-elderly-woman-christmas-day

amnblog

Only this week I was mentioning the story of this French lady to my colleague here in the office Joe.

poormaria

See a broker, a decent one will be thinking of the same lender that's entered our thoughts, I wouldn't hold my breath but it's worth asking the question. Couple of pitfalls though so the only thing you can do is ask
Definitely go through the broker channel, the lender in question has not got a good rep for their inhouse advisors who have a habit of saying no to everything without underwriter clarification

poormaria

Ah didn't see the vendors wanted to continue living in the house... Hmmmm