First time buyer, having help from parents.

CammyMick

Hellooo, im a long time lurker, im struggling to find advice on this particular issue and thought it would be best to ask here.

Right, i am a first time buyer - I have recently came to the conclusion, to afford my "forever" home, that i cannot get the mortgage ammount as a single man whilst devoted to working full time in local authority and with none to little debt (a van i pay for) getting the mortgage ammount i need of £120,000 is not happening, my mother has an idea of lending me a large sum of money, but even that wont cut the mustard on getting my house - so she is coming around the idea that she may see if she can be my 2nd applicant on my mortgage.

She is currently a homeowner (with my dad) she owns her own buisness for the last 26 years and pays herself a minimal salary which is less than what i earn, even though the business income is 2-3x what i make yearly.

Is there any problem with having a parent as your second applicant, who is allready a homeowner, on your mortgage? please note i am a first time buyer, and a flat is not what i intend to buy as that is not me - ive lived in flats before rented and it is not my forte.


Help to buy schemes are not very helpful to me, mainly because of being a single man - the help to buy is usually shared equity and i cannot get enough from halifax - i have tried the Lift scheme through grampian housing and i am limited to a 1 bedroom apartment unless i go 40 miles away from my home which then i am allowed a 2 bedroom - but the ammount i can spend is cut by a quater because of the area.

i make a fair ammount of money from additional hours which have been consistant for 4 years and im being told i cannot count these in my mortgage, or at most i can take 1/4th of them, im not looking to buy something which is described as "the biggest purchase of your life" to not be happy living in it, which is why i want to buy something that suits me (as a person) with country living, and a small bit of land which i can work on my cars or build a garage to do that further down the line.

A mortgage on a property of £120,000 is less than paying £700 rent per month, so im not sure where the goverment gets its "affordability" stats from, but in my few years of looking at houses now - its completely off-putting to the point where i think i may just live with mum and dad until im 40 :j

Signed - a frustrated first time buyer

Cheeky_Monkey

As your mum already owns a house, if you are joint purchasers, I think the extra 3% stamp duty will apply to your purchase as your mum will, in effect, own two properties.

aneary

If you buy with your mother you will have to pay the additional stamp duty, due to it being her second home.

She will be liable if you can't/don't pay your mortgage and if house prices fall could end up losing her home.

If your parents already have a mortgage she may not be able to be on your mortgage due to affordability.

Newtown

Housing in UK is a SCAM. (I say that as someone who is in the process of buying their first property : full disclosure. Paying £750 rent my self. I know at some point a crash is coming. But then part of me thinks rent money is money down the pan as well. You cannot win. )

Its a sad thing that housing is an "investment" rather than a basic human need. everything depreciates apart from housing . (Help to guy . affordable housing . help to buy ISA etc etc all to keep the prices inflated)

A mortgage on a property of £120,000 is less than paying £700 rent per month, so im not sure where the goverment gets its "affordability" stats from, but in my few years of looking at houses now - its completely off-putting to the point

Pixie5740

You're comparing apples with oranges just looking at rent payments and mortgage payments. There are more costs to home ownership than just paying the mortgage.

If your mum becomes a joint owner with you then the purchase will be subject to the higher rate of LBTT (not SDLT as Grampian is in Scotland) and potentially CGT further down the line. However, you could look at mortgages for joint applicant, sole owner. They aren't as plentiful but they do exist. Engage an independent mortgage broker to find one that will work for you.

CammyMick

Thank you both, i did think there would have been a price to pay - in this case 3% :P

I can pay for the mortgage no problem - and i would never put my parents in a difficult position to lose their home, ive been in the same job for the last 6 years and is 110% secure

My parents mortgage i beleive is paid off (or is nearly paid off) the house was bought the same year she started in buisness so would be 26 years ago

The way i thought of working it, is all the deposit is mine to slap down, i just need her name on the mortgage which would entitle me a higher mortgage ammount, and if its do-able is a few years down the line (lets say 3-4) i can remortgage the property which should take her name off it, right?

CammyMick

Pixie5740 wrote: »

You're comparing apples with oranges just looking at rent payments and mortgage payments. There are more costs to home ownership than just paying the mortgage.

If your mum becomes a joint owner with you then the purchase will be subject to the higher rate of LBTT (not SDLT as Grampian is in Scotland) and potentially CGT further down the line. However, you could look at mortgages for joint applicant, sole owner. They aren't as plentiful but they do exist. Engage an independent mortgage broker to find one that will work for you.

Thank you for that, ill have a look at the joint applicant, sole owner mortgages, its not something thats really popped up

I know theres different and more costs to owning a house rather than renting, but from my searching over the time, ive realised that whatever im looking for and is in my price range isnt going to be a tasteful picture to start off with

ST1991

If she is able to lend you money so you can put down a larger deposit, then the amount you need to borrow will be lower, hopefully enough so you are into your lending limits.
Be careful with 'lend deposits' though as essentially you are using a debt to gain a larger debt and i think sometimes the deposit needs to be gifted not loaned (e.g agreed you do not need to pay her back for it)

That would probably be the better thing to do, instead of a joint applicant.

Also more often than not the first home you buy won't be your forever home... Is there anything else you can look at for a lower cost, with aim to move to a forever home the next time?

Lurkingtoposting17

Hi Cammymick

Me and my mum looked into this. She's about 10 years from retirement, mortgage free and a good credit history. We were aware sdlt would be more but were hoping her name on the mortgage would increase my borrowing.

Sadly that wasn't the case. Although I was eligible for a 35 year term mortgage, my mum was not. As she would ineffect own 50% of my house, my possible mortgage term got reduced. So did my borrowing power. I was offered nearly ~70k less with her name and salary included. We then asked if using her as a guarantor would be possible but apparently the only time they will truly consider this is when you are in a job were base salaries are low but earning potential in future is high. Me not being junior in my position means I have no possible real ramp up in salary for my parents to offset.

I looked at every option. So I truly sympathise. I wanted £30/40k more than I was being offered and had the deposit for 10% based on those values. My parents have no real savings, but steady incomes and do own their home outright. We thought this would help, but it didn't.

My decision in the end was a compromise on location (I'm moving around 10/20mins further out than I wanted to) it was this or get a flat rather than a house, and I was determined to have a house.

Is it my dream home, no. Will it do, yes it's a great starter home with potential and the trade off for me was the right one.

I hope this helps. From one fellow ftb who has despaired to another

silvercar

I thought some lenders would allow family members to support your mortgage eg Barclays family springboard mortgage.

Offering it as an idea, don't really know how it all works.

Cakeguts

You are trying to do something that most people can't afford to do. You are trying to buy a second or third time buyers house as a first time buyer. What you want to do is to start off with something that you can afford to pay for on your own where the mortgage is a lot less than the rent and then save up to buy the second time buyer or 3rd time buyers house when you have practiced budgeting and living in a cheaper one. If you have borrowed to your limit and your mother has also borrowed money should you have an accident or get ill so that you have a much reduced income you don't want to the house to be repossessed because you have been unable to save enough to get you through any period of not being able to pay the mortgage.

Owning a property is much more expensive than renting because you are responsible for paying for everything. You can't ring up the landlord if you need a new boiler. You have to pay the £1000 for the boiler out of your savings. If the fence blows down you pay for it. If there is leak you pay for it. Not only do you pay for it but you also take the day off work to wait for the people to come round and do the work.

If you are renting and you lose your job because you become ill you can claim benefits to pay the rent. There are no benefits that pay a mortgage so you are putting yourself at risk of becoming homeless if you stretch your finances to the limit to get a more expensive house than you can really afford rather than having a bit of patience and buying a starter home and saving up. If buying really is cheaper than renting you should be able to buy a cheaper property and save up to get a bigger house really quickly. I suspect though that once you have actually bought somewhere and are no longer renting you will find that it isn't as cheap as you thought.