Buying a property with my dad, FTB

benbay001

20SmthngSver wrote: »

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.

If you borrow £150k and rates rise from 1.5% to 8% you will be paying an additional £9k per year out of your £20k income.


On top of this, don't underestimate how likely you are to have issues with the newly purchased property that need money throwing at them to solve.


If your dad is truly happy to help you then get him to re-mortgage his place to release some equity and then gift that to you.

csgohan4

generally you can only borrow x4.5 your income, so 80-90 k sounds about right assuming no debts and adverse history. What were you hoping to borrow?

Lenders go on the now, not the future. Putting your dad on mortgage apart from the obvious stamp duty, you may get a shorter mortgage given his age and therefore payments a month will be very high

Lenders also stress test you as part of the current regulations. Although recent guidance says it could be 1% over current interest rate, can someone else confirm this?
(https://www.fca.org.uk/publication/consultation/cp19-14.pdf)


Money and family should never mix, you have been warned

https://forums.moneysavingexpert.com/discussion/5980752

https://forums.moneysavingexpert.com/discussion/5958075

https://forums.moneysavingexpert.com/discussion/5932721

https://forums.moneysavingexpert.com/discussion/5946603

https://forums.moneysavingexpert.com/discussion/5848405

20SmthngSver

benbay001 wrote: »

If you borrow £150k and rates rise from 1.5% to 8% you will be paying an additional £9k per year out of your £20k income.


On top of this, don't underestimate how likely you are to have issues with the newly purchased property that need money throwing at them to solve.


If your dad is truly happy to help you then get him to re-mortgage his place to release some equity and then gift that to you.

That's assuming I'm on an SVR or tracker. I can't see the BoE putting up rates by 7% in one go when it's taken years and years to get them to incrimently increase up to 1%. I'd choose the longest fixed term they can give, and some are as low as 2.5-3% for 10 years. I've seen some mortgages as low as 0.8% for 2yr fixed. I can't see rates going up in one go by as much as you say, and there's certainly no indication they will so it's hypthetical.

He doesn't need to re-mortgage to help me. He has money to gift me if he wanted to without touching assets. It's just the income box on the application that is the issue, hence why I need someone else with me to get a higher mortgage. I already know that him applying with me would increase my lending potential to up to £210k from £80k by myself. I'm fine for the deposit and repayments. Which is why the JBSP mortgage is really appealing to me, as it avoids the issue of stamp duty and capital gains on their part but they can still help me.

20SmthngSver

csgohan4 wrote: »

generally you can only borrow x4.5 your income, so 80-90 k sounds about right assuming no debts and adverse history. What were you hoping to borrow?

Lenders go on the now, not the future. Putting your dad on mortgage apart from the obvious stamp duty, you may get a shorter mortgage given his age and therefore payments a month will be very high

Lenders also stress test you as part of the current regulations. Although recent guidance says it could be 1% over current interest rate, can someone else confirm this?
(https://www.fca.org.uk/publication/consultation/cp19-14.pdf)


Money and family should never mix, you have been warned

https://forums.moneysavingexpert.com/discussion/5980752

https://forums.moneysavingexpert.com/discussion/5958075

https://forums.moneysavingexpert.com/discussion/5932721

https://forums.moneysavingexpert.com/discussion/5946603

https://forums.moneysavingexpert.com/discussion/5848405

I live in an area where I'd be lucky to get a 2 bed for £300k, so that's my budget. Factor in Help to Buy loan of 20%, plus my deposit (which I'm currently increasing by £1000 a month), plus any gifted money, then I'd be looking for up to £200k. I work in a family business, I don't agree that family and money should never mix. I get some cases go wrong but the majority don't. They can see he has asset and capital, so I don't think I'd have a problem in paying back. It's all to me anyway, but that's morbid so not going down that route of conversation .

The JBSP mortgage is my only chance, and my parents have said they'd do it with me because they know it's my only chance. It doesn't seem to matter to banks now what deposit you have. I could have a £150k deposit and they'd still only give me £80k or so based on my income.

gooludare

But if you have a huge deposit (including what cash your Dad or anybody fort that mater can give you), surely the amount of mortgage loan you need will automatically become less since the property price is fixed and your income is fixed to begin with. And the smaller your mortgage loan, the more your affordability and so the less qwam from the lender.

8ofspades

20SmthngSver wrote: »

That's assuming I'm on an SVR or tracker. I can't see the BoE putting up rates by 7% in one go when it's taken years and years to get them to incrimently increase up to 1%. I'd choose the longest fixed term they can give, and some are as low as 2.5-3% for 10 years. I've seen some mortgages as low as 0.8% for 2yr fixed. I can't see rates going up in one go by as much as you say, and there's certainly no indication they will so it's hypthetical.

Even if you fix, they will judge your affordability on potential interest rises and SVR over the term of the mortgage, in the event that you don't or can't remortgage at the end of the fixed term period.

LRmortgage

I’m pretty certain that you can’t have a JBSP mortgage if you are using the Help to Buy scheme. It’s worth double checking before you get your hopes up of using both together.

enthusiasticsaver

If you only earn £20k a year (regardless of whether paid as a dividend or salary) then you will only be able to borrow around 4 to 4.5 times your income. The lenders will want to make sure you can repay it even if rates rise. You also need to remember that your bills living with your parents are presumably minimal but once you move into your own place you will need to pay council tax, utilities etc so your outgoings will rise.

Most lenders insist on the names of the borrowers also being on the deeds so that would mean your dad paying double stamp duty as a second home owner and the term would be reduced due to his age as many will not lend past the age of 70. That will increase the monthly repayment. It also eliminates you from many of the FTB products. The JBSP mortgages are not available from all lenders.

I also disagree that things rarely go wrong when family and money are involved. Read this forum to find out how many people have lost money where they helped family out and things go wrong.

As I see it you have two choices. You either continue to save your £1k a month until you have a bigger deposit and look into cheaper houses or areas or your dad gifts you a large amount to bring the mortgage down to what most lenders consider affordable for you on a frankly less than average wage. As you claim a dividend from a family business they will score you more strictly than if you were on a monthly wage from an employer.