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Buying Property from Parents
IncredibleSonic
Posts: 3 Newbie
Hi All. Just looking for a bit of guidance. I may have the opportunity to purchase my first property from my parents.
The house is worth around £380k in its current condition and has a mortgage of around £60k on it, so we were looking at a scenario where I would get a mortgage of £100k from the bank where myself and my partner could pay a 20% deposit, so my parents can pay off their remaining mortgage. The remaining £40k would be used to renovate the property.
The remaining £280k balance would be a private loan between myself and my parents.
How would I reflect this in a mortgage calculator online? Do I put the property price as £100k and show a £20k deposit, or would I put the full property price in at £380k, and show the deposit at £280k?
It's all hypothetical at the moment, and I'm aware I'd need legal guidance re the private loan, but I just want to do some number crunching on this rainy Saturday!
The house is worth around £380k in its current condition and has a mortgage of around £60k on it, so we were looking at a scenario where I would get a mortgage of £100k from the bank where myself and my partner could pay a 20% deposit, so my parents can pay off their remaining mortgage. The remaining £40k would be used to renovate the property.
The remaining £280k balance would be a private loan between myself and my parents.
How would I reflect this in a mortgage calculator online? Do I put the property price as £100k and show a £20k deposit, or would I put the full property price in at £380k, and show the deposit at £280k?
It's all hypothetical at the moment, and I'm aware I'd need legal guidance re the private loan, but I just want to do some number crunching on this rainy Saturday!
0
Comments
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Where are your parents going to live after this transaction?0
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They own another smaller house which would be easier for them to maintain.0
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Banks tend not to like other lenders being involved, so the £280k loan from your parents could be problematic.0
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So
* you are paying them £380K
* getting a mortgage for £100K
* getting a loan from parents for £280K
* then putting in savings - you say 20% deposit but 20% of £380K = £76K. I'm guessing you mean £20K savings though!!
Correct?
Price = 380.How would I reflect this in a mortgage calculator online? Do I put the property price as £100k and show a £20k deposit, or would I put the full property price in at £380k, and show the deposit at £280k?
Deposit is what you are putting in (£20K? 76?)
But you'll need to tell any lender about the parental loan and many lenders won't like that - go and see an independant mortgage broker.0 -
Correct thank you! The deposit would be £20k (wish it were £76k haha!)
I think I’ll have to go down the route of a mortgage broker. As I say, all hypothetical for now, but I appreciate the guidance and the steer. I just want to make a spreadsheet to forecast things at this early stage!0 -
Your parents own the smaller property outright?
Is the value of this property (assuming that you like it and it is in a suitable location) such that you could get a mortgage to buy it for full value?
Your parents could then use the cash raised to pay off the mortgage on the main home and improve/adapt it?
At some point in the future you might be in a position to organise an exchange of properties?0
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