Can I buy my mum's house??

Joe.llewellyn

Hello, to cut a long story short I need to buy my mum's house in less than 2 years.

About me. I'm 21. I earn £16,000 a year (hopefully due a pay rise but its probably best to asume not)
I have very recently bought a house for £37k with my mate with all intentions to do it up and make 10k before tax in my back pocket , he fronted all the money for deposit and doing it up but will only tale half of the profit. We plan on having it sold in 1 yr max before I need to buy my mum's house

My plan is to eventually work for myself doing up and renting out property..

About My mum's house. Me, my mother and brother all live at the house. It's value was 500k but we have done a lot of work on it. It has a mortgage of 160k.

Now my big question is can my mum sell her house to me for £160,000,

Do I need a deposit because there's enough equity in the house that if worse case happens and the house gets crashed into by a plane and burns down there will still be enough equity in the land it's built on and the land around the house for the bank to sell and get their 160k back.

And is there any legal reason, tax reason, capital gains nonsense?

If I can't get the mortgage on my own can me and my brother get it. He's 23, similar wage. Never had a mortgage before.

If I was to explain all the whys and what knott it would of been a long post. Thanks in advamce

Caz3121

as a ballpark you can use 4x salary as an indication of mortgage amount, so on a £16k salary you would be looking at around £64k
Where is your mum going to live when she sells the house? there will be challenges if the plan is for her to remain in the property
If your mum sells you a £500k property for £160k then she is effectively giving away £340k which could cause issues if she needs to claim benefits in the future

Harryp_24

Joe.llewellyn wrote: »

Hello, to cut a long story short I need to buy my mum's house in less than 2 years.

About me. I'm 21. I earn £16,000 a year (hopefully due a pay rise but its probably best to asume not)
I have very recently bought a house for £37k with my mate with all intentions to do it up and make 10k before tax in my back pocket , he fronted all the money for deposit and doing it up but will only tale half of the profit. We plan on having it sold in 1 yr max before I need to buy my mum's house

My plan is to eventually work for myself doing up and renting out property..

About My mum's house. Me, my mother and brother all live at the house. It's value was 500k but we have done a lot of work on it. It has a mortgage of 160k.

Now my big question is can my mum sell her house to me for £160,000,

Do I need a deposit because there's enough equity in the house that if worse case happens and the house gets crashed into by a plane and burns down there will still be enough equity in the land it's built on and the land around the house for the bank to sell and get their 160k back.

And is there any legal reason, tax reason, capital gains nonsense?

If I can't get the mortgage on my own can me and my brother get it. He's 23, similar wage. Never had a mortgage before.

If I was to explain all the whys and what knott it would of been a long post. Thanks in advamce

In short, No. You dont have the affordability on 16k a year to pay a 160k mortgage. Plus i take it your mum will still be living in the house and will have a vested interest in the property. What are you going to do in 5-10 years time when you want to move out with a girlfriend and you cant because you have a 160k mortgage youre paying off. Sell and force your mother out?

amnblog

My guess Joe is:

Mum's mortgage is ending in two years.
She is not in a position to take another.
You don't want to sell and downsize.
You want a way to all keep living there.

Is that it?

The first point is that your income and that of your brother would need to support the mortgage. Unless he earns a chunk more than you it wont currently.

David_White

As the people above have eluded to, you are going to need your Brother's income in order to get close to this being affordable on paper.

Please be aware that if you start working for yourself you may have difficulty proving your income early on being self-employed... especially if you reduce your tax bill by claiming lots of expenses. Something to be conscious of.

All of those points aside though, in theory what you are asking can be done in as much as your Mum is allowed to sell the property to you for £160k even though it's worth more.

This is called a concessionary purchase and there are lenders that will accept the equity in the property as your deposit.

Joe.llewellyn

Thanks for your replies,
My mother would still be living in the house yes, and she would contribute the majority to the bills still but it would all need to be in my name/brothers name.
The reason is that we have a intrest only mortgage where we would be expected to pay off a lump sum of 160k in 6 years.
But in 2 years the interest goes up to 1000 pound a month.

In reply to harry that wouldn't happen. The number one priority is to keep the house...Everything else would have to wait or won't happen. Now no offense intended but I'm not really interested in the iffs and buts of what happens if I get a gf or if I fall out with my mum etc etc. All that has been thought about

In reply to David white
Ye I understand that I won't get a mortgage being self employed. This shouldn't matter as it will be in years to come.

A question I ask is with mine and my brothers wages whats the chances that we would get a concessionary purchase mortgage? And can you provide any information on one?

Thanks very much.

Annisele

Joe.llewellyn wrote: »

My mother would still be living in the house yes, and she would contribute the majority to the bills still.

That is going to be a problem for the vast majority of lenders - possibly for all of them.

If your mother was giving you a gift of £340k equity free and clear, that would be one thing. But in the scenario you suggest, it wouldn't truly be a gift. In effect, she'd be exchanging £340k worth of house for your promise that she could live in the house for the rest of her life.

From the lender's point of view, that would almost certainly give your mother a prior claim on the property (i.e. your mother's claim would outrank the lender's). That means that if you were to stop paying the mortgage, it would be very difficult for the lender to repossess out from under your mother. Lenders don't like to get involved in things where they'd struggle to repossess if the borrower stopped paying - so they're unlikely to touch your proposal with a bargepole.

Has your mother spoken to a mortgage adviser at all? If she could get a mortgage in her own name (either on her own, or jointly with you and/or your brother) that would get rid of the problem I've described above. If she was a borrower, she'd be party to the contract with the lender - and so it wouldn't have the same concerns about its ability to repossess.

amnblog

Annisele wrote: »

That is going to be a problem for the vast majority of lenders - possibly for all of them.

If your mother was giving you a gift of £340k equity free and clear, that would be one thing. But in the scenario you suggest, it wouldn't truly be a gift. In effect, she'd be exchanging £340k worth of house for your promise that she could live in the house for the rest of her life.

From the lender's point of view, that would almost certainly give your mother a prior claim on the property (i.e. your mother's claim would outrank the lender's). That means that if you were to stop paying the mortgage, it would be very difficult for the lender to repossess out from under your mother. Lenders don't like to get involved in things where they'd struggle to repossess if the borrower stopped paying - so they're unlikely to touch your proposal with a bargepole.

Has your mother spoken to a mortgage adviser at all? If she could get a mortgage in her own name (either on her own, or jointly with you and/or your brother) that would get rid of the problem I've described above. If she was a borrower, she'd be party to the contract with the lender - and so it wouldn't have the same concerns about its ability to repossess.

This is incorrect. Some Lenders will allow Mum to stay - no problem.

amnblog

Joe.llewellyn wrote: »

Thanks for your replies,
My mother would still be living in the house yes, and she would contribute the majority to the bills still but it would all need to be in my name/brothers name.
The reason is that we have a intrest only mortgage where we would be expected to pay off a lump sum of 160k in 6 years.
But in 2 years the interest goes up to 1000 pound a month.

In reply to harry that wouldn't happen. The number one priority is to keep the house...Everything else would have to wait or won't happen. Now no offense intended but I'm not really interested in the iffs and buts of what happens if I get a gf or if I fall out with my mum etc etc. All that has been thought about

In reply to David white
Ye I understand that I won't get a mortgage being self employed. This shouldn't matter as it will be in years to come.

A question I ask is with mine and my brothers wages whats the chances that we would get a concessionary purchase mortgage? And can you provide any information on one?

Thanks very much.

So the issue is not the ending of the mortgage, it is the ending of the product?


Are you 100% sure the Lender wont offer mum a new product in 2 years time?

getmore4less

Maybe the(a) lender may also consider a full term longer that 6 years.

Still longer term there is the small matter of £160k that will need finding.