Am I considered a Cash Buyer?

JUKP

Dear Everyone

I am looking into buying a place, budget is quite low for London, 250k. This is the situation: My parents are buying and I will be renting from them. My parents have inherited but part of the money will come from a loan. They live in Italy and the will take the loan out there from a bank they have been wit for ages.

My questions is now, as I am very interested at a place, but they want a cash buyer. Am of course wondering why they demand that (is there something wrong with the place?), but the main question is if I could even be considered as a cash buyer (as the money is not coming from a UK mortgage)?

Thank you!

gettingtheresometime

So will the property be in the name of you or your parents.....are they 'lending' the money to you or buying the property?

Tbh I don't think you would be a cash buyer....part of the money either way is coming from a loan and if it's the later scenario then you strictly speaking aren't the buyer

davidmcn

Well, it doesn't sound like you're a buyer at all, are you? Your parents are buying, and as their funding depends on a loan they're not cash buyers either.

As you suspect, they might just mean the property isn't mortgageable, which doesn't matter if your parents don't need a mortgage over it, but your parents will want to find out what the problem is first.

steampowered

I had understood that most mortgage companies will not allow people to rent to close family members. Your parents might find that their plan breaches the term of their mortgage.

Personally I do not understand why you want to do this. You would have much more flexibility if you rented yourself. Unless your parents are charging you less than the market rent?

Mickygg

A cash buyer means you have the cash in the bank ready to go ahead with the purchase. You don't and your folks have a loan so you are not a cash buyer.
However if your folks take out the loan before offer then you would be a cash buyer, albeit your folks would be.

davidmcn

steampowered wrote: »

I had understood that most mortgage companies will not allow people to rent to close family members. Your parents might find that their plan breaches the term of their mortgage.

Parents are not as far as I can tell planning to take out a mortgage over this property.

Lilla_D

If the money is already on your parents' bank account ready to go, then yes, they could be considered a cash buyer, not you, as you are not the buyer.

Indeed most mortgage lenders don't allow renting to family members, but a few allow a family "gift" that is repayable. I.e. if your parents were to give you the entire sum, but you'd have to make payments to them in return to quasi repay them, then a few lenders (even high street banks) allow that. In this case you'd become the buyer and because the entire sum would be on your account ready to go, you'd be a cash buyer.

Just to note, cash buyers may be favoured because the property is not mortgage-able, but quite often it's because of the wide-spread view that someone with a mortgage is a high risk buyer, as they may not get the mortgage approved and the seller would be wasting their time. I've seen plenty of examples of the latter scenario. It's the same nonsense as estate agents' demand for the valuation to be done asap even though the draft contract is not even sent to the buyer's solicitors yet...

Cakeguts

Is it a flat? It may be only available to cash buyers because the lease is too short for a mortgage. This sounds like a very bad idea for your parents especially if they don't understand the leasehold system in the UK

G_M

When a seller says they want a 'cash buyer' they mean one or both of two things

* someone with cash in the bank, not requiring a mortgage

* someone who does not need to sell a property in order to raise cash to buy

The reason the seller wants a cash buyer is either

* becuase the buyer will be quicker and easier (no waiting for the other property to sell, and no waiting for a bank to approve the mortgage)
or
* there's something wrong with the property so no bank will lend against it

You need to find out which, because even if you/your parents have the cash, you may not want to buy if something is wrong with the property

My parents have inherited but part of the money will come from a loan.

What kind of loan? A mortgage or other loan secured against the property? Or an unsecured loan?

JUKP

Thank you so much for your answers.

I think thats how we would do it eg. I would become the buyer as they would transfer me the whole sum.

Just checked the place we are interested in and it says: long lease for a term of 125 years, from 2004 at a ground rent of £10 per annum.

I have to look into this myself, but am now just assuming that a 125 year lease is considered quite good?

Thank you all for the responses, much appreciated.

eddddy

JUKP wrote: »

I have to look into this myself, but am now just assuming that a 125 year lease is considered quite good?

If the lease is 125 years, that won't be a problem for the mortgage.

Other issues that might make it unmortgageable (or difficult to mortgage) include...

- it's a very small studio (under 30 sq metres)
- it's in a high-rise block (5th floor or above)
- there's a 'problem' with the lease