How could it work...?

emmajeff1985

Hope it's OK to seek advice of those who may be slightly more experienced...! I'll try and keep it short but it's a bit complicated.

Basically my partner and I privately rent our property. He has approximately £24,000 in Premium Bonds, from inheritance. We are unable to buy a house at the moment due to both of our credit ratings being quite poor. We did approach a broker last year who did manage to find us a couple of mortgages, but the interest on them was pretty high so he advised we wait another year or so until our credit ratings are better.

We've always wanted to get into property development, but obviously £24,000 is not enough to buy somewhere outright (we live on the south coast).

Unfortunately his Nan has recently passed away. She owned a 3 bedroomed house for years, but re-mortgaged some years ago in order to release the equity.
The amount owing on her house is around £160k and it's down to her 3 children (one of whom being my partners mum), to sell the house and repay the bank within (I think) 3 months.

Without being too morbid, this is an ideal opportunity for us. We are trying to work out how we can do things the best way within the timeframe, but also not to offend anyone.

I suppose our two options would be to ask if we can buy the house for what is owed, with a 10-15% mortgage deposit and then use the rest of his money to do it up (it needs completely doing up throughout). But we then still face the problem of only being able to get a high-interest mortgage at the moment though.
Or, use his money to do it up before it sold to anyone else, so that they can then sell it for more money (it would be worth quite a bit more just from making it more modern due to its location) - and when the house sells my partner gets his money back, plus the profit (minus fee's). Obviously that doesn't get us a house but it'll add to his savings, putting us in a better position for when our time comes.

Does anyone have any advice on either of these options, or even have any other suggestions..?! It's difficult because of the timeframe and also not wishing to offend or tread on anyone's toes (no-one else wants the house, they just plan to sell it as it is)

leespot

If they plan to sell as is, it's unlikely they'll want you to spend money doing it up.

The second option has disaster written all over it, families and money never tends to mix well.

Jenniefour

Agree with Leespot. Fraught with potential family relationship problems going forwards. The immediate difficulty that strikes me with your first plan - to buy the house for what is owed to the bank - is that the beneficiaries of the estate would need to be willing to give up part or possibly all of their inheritances, the remaining equity in the property. Assuming there is some. It's not clear what makes you think this would be a possibility, especially as you have not been approached by the Executors/beneficiaries with this offer. Executors have a duty to get the best price possible for any assets, such as property, when someone dies. And that often means selling the property as it is in these circumstances, rather than spend money on it which may not be got back on the sale.


A wiser plan would be to carry on getting your credit ratings sorted out and start saving as much as possible to add to the money you have already inherited.

teddysmum

The £160000 is almost certain to be less than the house's value, so beneficiaries will be reluctant to give money away.


You also say that you have had problems getting a mortgage so surely the same applies here ?


!0% of £160000 is £16000 leaving just £8000 to do up, without thinking about the fees incurred by the purchase. This would just about cover a basic kitchen and bathroom refit. A new boiler could be £3000+.


15% deposit would be £24000,so there's be nothing for doing up and no funds to pay buying fees ( search, solicitor etc)

snickpan

Emma, read your post again, I'm sure you've missed a bit out: "I suppose our two options would be to ask if we can buy the house for what is owed, with a 10-15% mortgage deposit and then use the rest of his money to do it up (it needs completely doing up throughout)."
Do you mean buy it for what is owed, do it up, and then pay back the family in some way? In effect, you're getting a house very cheap, and the family are missing out on their inheritance.

Scrounger

emmajeff1985 wrote: »

Does anyone have any advice on either of these options, or even have any other suggestions..?

Have you thought about moving to a cheaper area?

Eg: http://www.rightmove.co.uk/property-for-sale/property-48328200.html

No need for a mortgage (and you're still by the sea) :beer:
Scrounger

Marvel1

While the Mum may agree to option 1 to help out, I can't see the other 2 agreeing.

I can only think to keep on boosting your credit and saving.

BrassicWoman

if you are fortunate enough to have some money from inheritance coming your way, then use that to find a fixer upper.

Money and family do not mix; walk away from this house. There will be another.