Help on selling/buying in a short amount of time

lindemann187

Hi all,

Hopefully this is the right forum and not the mortgages one.

I’m hoping somebody might be able to help with some guidance the situation that my mum and nan are in at the moment. My nan owns her own home outright and it is now on the market for £90k (very recently reduced from 95k). She wants to buy a new bungalow for £180k (very recently reduced from £190k) with my mum living with her and paying the rest of the mortgage. This new bungalow is absolutely perfect and I really want them to get it before somebody else does, there’s nothing else in the area that even comes close.

Plan A: is that my nan sells her house for £90k and then my mum takes on the remaining £90k mortgage. This is the perfect option, except my nan’s house hasn’t had a lot of viewings, and no serious interest at the moment. Also there is the factor of time, it would be amazing if there was some way of securing the new bungalow without finalising a sale on my nan’s house first.

Plan B: my mum takes on the full bungalow mortgage by herself, and then we can worry about selling this house later. She has around £26k in savings for the deposit. The only problem is that she has around £523 p/month outgoings at the moment. She can reduce these down to £398 immediately for the essential stuff, would a mortgage lender take into account the fact that this has now been reduced, even though it wouldn’t reflect on the bank statements for a month or two?

After a quick look online it seems that she should then be able to borrow at least £140k + the £26k deposit. I have around £50k in savings and I’m willing to lend them up to around £25k because I’ll be looking to get a mortgage myself in the next 6 months, and £25k left will be plenty for me. Obviously when the house sells I would get that back, then could the remainder just be put straight to mortgage?

Does any of this sound realistic or am I being naive?

Thanks for your help.

danslenoir

Plan A: Your mum isn't going to be able to get a residential mortgage on her own for the remainder unless your Nan's 90k is an unconditional gift (i.e. she gives up the legal right to her money back and will not have any legal rights with respect to the purchase property). This doesn't sound like a good idea. Also implications with respect to inheritance tax and deprivation of assets should your Nan die or require state-funded care.

Plan B: It sounds like you have used some online mortgage calculator to work out what your Mum can borrow and this is less than the mortgage she will require. Similarly to Plan A, if you want to make up the shortfall you will have to give this as an unconditional gift (not loan) to your mum. In this instance, and assuming you are willing to lie to the mortgage lender and declare your loan as a gift but still want the money back, why would your Nan pay you back on eventual sale of her property? Your Nan would not be an owner of the bungalow or have any rights over it. It would be your Mum who should be paying you back, not her.

This all sounds very messy, and not a great idea.

G_M

Who is going to own the bungalow?

Is your nan eligible for a mortgage ( since you say mum will "takes on the remaining £90k mortgage.")?

glasgowdan

G_M wrote: »

Who is going to own the bungalow?

Is your nan eligible for a mortgage ( since you say mum will "takes on the remaining £90k mortgage.")?

The funds from the nan's house sale would be the other 90k... great in theory.

Cakeguts

None of it is realistic. You have to look up what happens if someone who might need nursing care in the future hands her money over to someone else which is what your Nan will have to do if your mum wants to get a mortgage on the bungalow.

Your Nan's house hasn't sold because it is on the market at more than anyone wants to pay for it. A house is only worth what someone will pay you for it. It isn't worth what an estate agents tells you it is worth or what you think it is worth.

This whole plan is NOT good for your Nan who at present owns her property outright? If she gets a house with a mortgage she could become homeless if something happens to your mum and she becomes unable to pay the mortgage.

I would suggest that no one even considers having your Nan move unless she can move into something that she doesn't need a mortgage to buy.

xylophone

Would you consider buying your grandmother's house?

lindemann187

Thank you for all the feedback everyone, it's a lot to consider. Your responses were along the lines of what I was thinking.

The reason she wants to move is because the are she's in at the moment is absolutely horrific and is getting worse by the day - hence why it's not the easiest place to sell.

It looks like the best thing to do would be to start looking for properties that are a lot lower in price.