[solved] Getting a mortgage for a new house but my sister will live in it?

hdarren

My sister has a house and is currently doing it up to sell. She has spotted another property that she thinks has a lot of potential, but since she hasn't finished her current house she can't sell it just yet nor get a second mortgage for the new property. What she would like me to do is for me to get a mortgage for the new property which I am able to do, and then she would move in and give me the monthly mortgage money and council tax. Then when she's finished the old house she will sell it on and buy the new property off me eventually. Otherwise she thinks there's a very high risk the new property will be bought by somebody else before she has an opportunity to buy it.

Firstly is this even legal? I'm not sure a mortgage provider would look favourably on me buying up a house for somebody else to live in. Presumably I would have to tell them this but I don't know if it would be harder to get a mortgage for effectively a buy to lent arrangement.

I've never bought a house before so would appreciate any other problems you think I would face. Thank you.

Marvel1

You will be a landlord and will follow the responsibilities that come with it.77

I would not do it, too messy (future) and the fact you will no longer be a first time buyer and lose the incentives.

Cakeguts

You would become her landlord.


I think you need to know this. Never let to family or friends. The reason for this is that it never ends well.

G_M

As you will be receiving rent (mortgage payments), how much do you know about a landlord's legal obligations? Tax? etc


Start here:
* New landlords: advice, information & links

Kynthia

You will need to tell your mortgage company that it won't be your home and you'll be letting it to family. This will make it more difficult to borrow.

You'll need to declare the payments you receive to the hmrc as rent even if you're not making a profit. You'll need to keep a record of allowable expenses and only mortgage interest is a deductible expense (not the capital repayment). If you're a higher rate tax payer you might not be able to deduct the total mortgage interest so even more chance you'll be taxed on a taxable profit figure.

What happens if your sister stops paying you, say she gets into financial difficulty or can't sell the other place? Will you evict her through the courts and cover the mortgage? What if you divorce or go bankrupt and your sister has paid rent but now loses the chance to buy the property from you?

Things to think about but it's doable if you know what you're getting into.

Doozergirl

What is actually in this for you?

If someone, or their project, is seen as too much of a risk for companies that literally nake their business out of lending money to people, what makes you think it's a good idea for you to borrow money to lend to her instead?

Recipe for disaster. Been there, got the T-shirt.

HampshireH

You say you have never bought a house before so why would you want to gift your 1st tjme buyer status and benefits to someone who seems to start a project and not finish it before asking for favours.

What if the project house doesn't sell?

Do you want to be a landlord?

Do you ever want to buy your own house to live in?

What if she doesn't pay the rent. Can you afford the repayements. Likewise are you able to get a buy to let mortgage. Often difficult.

I'm probably being cynical but it sounds a bit selfish on your sisters part. I really don't see what if anything you have to gain from this.

AnotherJoe

Tell your sister no, this is too expensive for you terms of all the legal and other costs both immediately and forgone when you buy your first "real house" plus it's very risky for both of you. Don't let her bully you.

MrsPorridge

How will you feel if further down the line sister says she can't pay the rent for a couple of months? However, she can still "afford" to eat out, buy takeaways, have a weekend away?

hdarren

Thank you everyone, you have confirmed my fears and thus will not be taking her up on this "offer".