Buying a property with my dad, FTB 30 April 2019 at 2:19PM in Mortgages & endowments 18 replies 1.7K views

20SmthngSver

I'm a first time buyer, I've spent about 4 years saving and I have a £40,000 deposit. I earn about £20,000 as a dividend payment.

I went to Santander for an informal mortgage appraisal and surprise, they said that I could only borrow £80k-£90k.

My dad, well parents, are mortgage free. I live with them.

My question is, can my dad and I apply for a mortgage together, to get the income part up in order to be loaned more? I've proved I can save and in years time I'd have saved more, and I can afford the mortgage repayments and utility bills, but it's the income which is the hurdle.

It would increase my mortgage potenial to between £185k-£210k based off of the mortgage calculators I've used from TSB and Halifax (I know they aren't case specific but they are pretty accurate, and what Santander advisor used herself) coupled with my deposit and a Help to Buy Equity Loan of 20%.

Only thing is I've noticed, the only mortgages offered are FTB, Remortaging, Second home mortgage mainly. Obviously I'm a FTB, and I guess my dad would be a second home mortgage. There doesn't seem to be a 'Mortgage' option, if that makes sense.

spadoosh

The problem youve found is much smaller than the real problems.

First and foremost would be stamp duty, presumably he already owns a home and thus if youre buying a house in that price bracket he (read you) will be subject to stamp duty costs.

The second is mortgage lenders dont like lending money to someone unless their name is on the deeds. So youre dad is almost certainly going to need to be on the deeds. Whilst not immediately a problem family fall outs can and do make things like this a very big problem at some point.

What the lender calls a FTB is a lot more variable than the government. So in this instance using FTB mortgage products would be probably the most suitable. I dont know much about the Help to buy equity loans iirc you can still use this you are a FTB but double check just in case owning with your dad would void it with him not being a FTB.

Jox

Stamp duty on £210,000 property will be £8,000 if you and your dad buy together and £0 if first time buyers buy it

20SmthngSver

Thanks both for your comments. So buying with my dad with him on the deeds would void off my incentive for no stamp duty as I am FTB but he isn't. I guess it's irrelevant that the property is under £300k.

Would these drawbacks still apply if I apply solely, but he stands guarantor for me? So the mortgage and deeds are in my name. Or would that not deal with my income x5 for a mortgage issue?

spadoosh

20SmthngSver wrote: »

Thanks both for your comments. So buying with my dad with him on the deeds would void off my incentive for no stamp duty as I am FTB but he isn't. I guess it's irrelevant that the property is under £300k.

Would these drawbacks still apply if I apply solely, but he stands guarantor for me? So the mortgage and deeds are in my name. Or would that not deal with my income x5 for a mortgage issue?

If you apply in your sole name your income multipliers will be based on your sole income so back to square one. Guarantor loans are more for people with a bad credit history than people trying to borrow more than typically allowed.

Caz3121

have a search for "joint borrower, sole proprietor" products

20SmthngSver

spadoosh wrote: »

If you apply in your sole name your income multipliers will be based on your sole income so back to square one. Guarantor loans are more for people with a bad credit history than people trying to borrow more than typically allowed.

I see, thanks.

That's the issue with me. I have a deposit and I can afford the repayments. It's just the income box they go off. It's almost irrelevant what deposit you have now.

20SmthngSver

Caz3121 wrote: »

have a search for "joint borrower, sole proprietor" products

I had a look. Barclays, Metro Bank, Yorkshire Bank and Clydesdale Bank offer these JBSP, and a few small building societies.

This could really be something. Thanks, never come across it.

Edi81

You can afford the payments at current interest rates. What if rates were to increase to 7 or 8%?

20SmthngSver

Edi81 wrote: »

You can afford the payments at current interest rates. What if rates were to increase to 7 or 8%?

I can't see rates rising from 1.5% to 8%. Some are already 4% or 5% that I've seen. A few % on a monthly repayment wouldn't be that much. I'd be looking at a 5 or 10 year fix anyway.

[Deleted User]

I can't see rates rising from 1.5% to 8%

You can't see it (and neither can I at any great speed), but that's what the banks have to stress test your ability to pay against.