Buying house from parent / part exchange

D3xry

Hi all,
First post here so forgive me if I'm flouting any rules!

Before I pay for advice I thought I would try here.

Basically I'm not sure what makes most financial sense for a house purchase/move. Here's some details about my situation:

I currently rent a property off a parent who is willing to sell to me whilst 'gifting' a deposit from the price of the property (assuming you can do that? Property price approx 80k and parent will gift 10%). So essentially I do not need a deposit to buy the house. However, it's not a house I want to stay in for more than 1 - 2 years. I have been looking at new builds, more specifically the part exchange schemes. I earn 52k/year so affordability wouldn't be an issue (approx new build price 200k).

I figured I have the following two options but I have no idea which one makes most sense or if the first one is even possible:

1. Buy the property off my parent using the 10% gifted deposit (hopefully allowed), then part exchange that property for a new build after about 12 months of living there. I'm guessing even for a part exchange you would be limited to max LTV of 90% on the new property? If so I'd have to save an additional deposit to go with the house Id be part exchanging.

2. Continue renting and saving a deposit and then just move once I have 10% for the new house.

My worries with buying the house off my parent is if I am only staying there for 1 - 2 years would I risk ending up in negative equity or essentially trapped in that house for a lot longer than I'd hoped. Would ending up in my new build dream home be 'cheaper' using option 1 or 2?

Thanks in advance for any advice and hopefully I've provided enough info for someone to go off!

Dex

xylophone

You continue to rent from father, you save your deposit (making use of LISA if eligible), you buy your new house, your father sells the rented property and makes you a present of 10% of the proceeds so that you can top up your emergency fund?

D3xry

I think the intention would be to keep renting it out unless I bought it.

Don't qualify for LISA unfortunately.

buggy_boy

Even though you would be buying the property from your parents, you will still have to pay various buying fees including solicitor fees and mortgage fees. Presuming you have never owned a property before and the property is under £300,000 then no SDLT however when you move it will mean you will not get the SDLT exemption for first time buyers...

The amount it will cost you to buy and sell your parents house you would likely loose money...