Help from bank of mum and dad

Chencat

Hi all,

I am currently renting my council house and would like to buy it through the right to buy scheme. Unfortunately I can't get a mortgage ( I can purchase it for around £60,000), however I wondered if it's possible for my parents to remortgage their home which no longer has a mortgage in order to buy my house and me pay the monthly payments. It would look like they were gifting me the money and the house would only be in my name. They are 70 years old, still working and their home is worth approximately £140,000. Is this possible?
Thanks for any advice

jimjames

It seems unlikely that they'd be able to get a mortgage to do that unless they have a substantial income source

Xyzzy

Hi Chencat, it may be possible theoretically, but most lenders wouldn't take the mortgage past age 80 (some 75), so the longest term would be 10 years which might mean relatively high monthly payment. The lender would also base it on retirement income ie. pensions only due to their age.

Whats the reason that you can't get a mortgage?

da_rule

Some lenders (Nationwide for example) have increased the age limit for mortgages to 85. So, in theory, if your parents could, based on their current income afford to repay a £60,000 over a maximum of 15 years then yes it is a possibility. You mention they are still working so it would come down to affordability, like other mortgages.

When it comes to the funds, you will obviously need to prove where they've come from. If it is a gift then your parents may also be asked for proof of where the funds have come from. This isn't a problem, but it's a good idea to keep the paperwork etc as evidence.

nicholbb

Question might be why you can't get mortgage if you can make the monthly payments. If bad credit it may not be hopeless try a broker if not already done so. If income is partly benefit this can still be used. If lack of deposit could your parents get you the £7k instead?

da_rule

It's unusual to a certain extent to struggle to get a mortgage on a right to buy property. In your example, there's approximately £80,000 of equity in the property. As nicholbb says, a mortgage broker may not be a bad idea.

The other issue may be that actually the property is classed as defective under the Housing Act, therefore may not be mortgageable. May still be worth seeing a broker as there may be some specialist lenders out there willing to take it on.