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Cash house purchase parents loan
Quincunx
Posts: 19 Forumite
My parents have offered to lend me sufficient money (when taken with the proceeds of my current property) to purchase a house outright.
I plan after six months of owning the property to apply for a mortgage which I will use to pay back my parents.
The property is valued at 210k. The mortgage I will seek will be £140k.
I've been told that I won't be able to get a mortgage because of my parents loan.
My parents savings are currently held in various 'high street' bank instant access and ISA accounts savings accounts and have been for in excess of five years.
Grateful to receive the advice and guidance of the forum members.
I plan after six months of owning the property to apply for a mortgage which I will use to pay back my parents.
The property is valued at 210k. The mortgage I will seek will be £140k.
I've been told that I won't be able to get a mortgage because of my parents loan.
My parents savings are currently held in various 'high street' bank instant access and ISA accounts savings accounts and have been for in excess of five years.
Grateful to receive the advice and guidance of the forum members.
0
Comments
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A bit of further backgeound information concerning my original post.
The property I'm buying is not habitable and the project timetable for the refurbishment works is three months — if I'm lucky. We all know what builders timescales are like. Elastic.
Hence not being able to get a standard mortgage.
I need to close out on the deal within the next two weeks. Maybe even sooner.
The cost of a bridging loan is out of the question.
Why would I go down that route when I have a source of interest free clean funds which are auditable available to me?
Apologies to the forum members for not including this in my first post.
As always the advice and guidance of the forum members will be much appreciated.0 -
so in 6 months time (builders schedule completed on time!) you will have a property "worth" 210k with no mortgage against it, so 100% equity. You have not said if your parents will place a formal charge against the property?
you then seek a mortgage for 140k as a release of equity giving a LTV of 66.66%
what you spend that money on (ie repaying parents) has little bearing on whether you can get a mortgage for such a sum since the position is no different to what happens lots of times, ie: re mortgaging to pay off the current lender and taking out a new mortgage with a different lender0 -
Any potential lender will see you coming a mile off.
And if they don't, more fool them.0 -
sparky130a wrote: »Any potential lender will see you coming a mile off.
And if they don't, more fool them.
Why should they?
Presumably OP will cover rennovation cost, fees and £70k of equity from "proceeds of current house sale". So there should be no problem releasing £140k of equity on a £210k+ valuation after rennovation. (assuming income and credit rating are acceptable).0 -
Why can't you just take out a mortgage now and remove the parental loan from the equation completely?0
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Why can't you just take out a mortgage now and remove the parental loan from the equation completely?QuincunxPost#2 wrote:The property I'm buying is not habitable and the project timetable for the refurbishment works is three months — if I'm lucky. We all know what builders timescales are like. Elastic.
Hence not being able to get a standard mortgage.
The property is not currently mortgagable so a traditional mortgage at the moment is not feasible.0 -
My parents have offered to lend me sufficient money (when taken with the proceeds of my current property) to purchase a house outright.
I plan after six months of owning the property to apply for a mortgage which I will use to pay back my parents.
The property is valued at 210k. The mortgage I will seek will be £140k.
I've been told that I won't be able to get a mortgage because of my parents loan.
My parents savings are currently held in various 'high street' bank instant access and ISA accounts savings accounts and have been for in excess of five years.
Grateful to receive the advice and guidance of the forum members.
Wouldn't it be simpler for your parents to buy a % of the property and then you buy it off them? takes the parents "loan" out of the equation0 -
glentoran99 wrote: »Wouldn't it be simpler for your parents to buy a % of the property and then you buy it off them? takes the parents "loan" out of the equation
With very significant SDLT implications and potentially subsequent CGT costs. Loan is so much better.0 -
No, that would be much more complicated!glentoran99 wrote: »Wouldn't it be simpler for your parents to buy a % of the property and then you buy it off them?0
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