Can't get a big enough mortgage

Catmaspudding

I have been living in a house owned by my grandparents, which they originally purchased for around £65k for their parents around 1989.

Unfortunately, my great grandad died a few months ago and I was planning on purchasing the house. They estimated it would be around £150k, but it turns out it is worth £300k!. My grandparents need to sell as they need some of the money.

Me and my brother currently live there and it would be a shame to lose the family house. We have tired multiple ways to buy it, but between capital gains and my wage (which isn't even that low!) I just can't.

We even looked at buying a share of it (assuming my grandparents currently only about 100k now), but it looks like there is no way to do it without putting my grandparents on the mortgage, which they are probably too old to do (it also sounds like a terrible idea anyway). The plan was I could buy the rest when I get promoted - or we could just sell if they needed the money.

I earn about £47k a year, which I am hoping will increase shortly.This still only means I can get a mortgage of about £170k.

I found a 300k mortgage would be about £1,300/m. As I earn £2,800/m this doesn't seem that bad - especially as rent on a two bed (for me and my brother) is more!

I can't put my brother on the mortgage as he only has a temp job.

Does anyone have any suggestions?

I might be able to buy a 2-bed flat in the area, but it isn't the same as my family home.

I know everyone is super depressed with the housing market right now, but I feel I earn a good wage with no dependants and I'm still losing my home.

csgohan4

Lenders lend now based on affordability, so max x4.5 your gross income minus any debts

Whether you think you can afford it now is not what the mortgage regulations go on now, they also stress test you and add +5%+ to see if you can afford it then as well.

If you cannot raise the funds, your grand parents simply sell and downsize

You can't buy what you cannot afford

Catmaspudding

I am considering the 'downsize' option, but I am struggling to find anywhere for £170k a commuting distance from Central London. Especially that my brother can also live in.

This isn't exactly a luxury house and there isn't much smaller.

x4.5 wage is actually £210k-ish, which might be a small 2-bed flat...I am aware I also have more legal fees etc then

I have the £30k deposit, and as the average rent in the area is high then the mortgage would be, I am just a little stressed (and depressed) about their definition of 'affordable'. In no way, shape or form does my budget look better if I am renting.

jennifernil

https://www.nationwide-intermediary.co.uk/lending-criteria/purchase-types

Would something like this work?

Kim_kim

Nixia wrote: »

I am considering the 'downsize' option, but I am struggling to find anywhere for £170k a commuting distance from Central London. Especially that my brother can also live in.

This isn't exactly a luxury house and there isn't much smaller.

x4.5 wage is actually £210k-ish, which might be a small 2-bed flat...I am aware I also have more legal fees etc then

I have the £30k deposit, and as the average rent in the area is high then the mortgage would be, I am just a little stressed (and depressed) about their definition of 'affordable'. In no way, shape or form does my budget look better if I am renting.

Could your grandparents afford to sell it to you for 200k?
You can afford that with the mortgage and your deposit.
I presume they are older anyway & will be leaving it to family anyway.

csgohan4

Kim_kim wrote: »

Could your grandparents afford to sell it to you for 200k?
You can afford that with the mortgage and your deposit.
I presume they are older anyway & will be leaving it to family anyway.

Careful with Deprivation of assets, should they need care in future, if your going down this route, get professional advice

00ec25

you had a choice
- spend 47k salary.
- save for a deposit.

the internet is not going to magically provide you with more money

kinger101

Nixia wrote: »

I earn about £47k a year, which I am hoping will increase shortly.This still only means I can get a mortgage of about £170k.

I found a 300k mortgage would be about £1,300/m. As I earn £2,800/m this doesn't seem that bad - especially as rent on a two bed (for me and my brother) is more!

I know of some lenders who'll lend at 5x income, so you could get one for £250K if you met their other criteria.

The problem is, you're still looking at affordability wrong. You also need to plan for what happens if interest rates rise. Repayments on the £300K mortgage you found would be £1,933 a month if they rose to 6%.

I'd suggest forgetting about the grandparents' home.

Instead

(a) detail all your income and expenditure;
(b) cut out any of the frivolous spending*;
(c) make sure you're maximizing any employer matching contributions for pensions
(d) save every last penny you can for a deposit of at least 10% on a property you can afford. Plus all the money you'll need for legal expenses (and possibly stamp duty). Use a LISA if you're eligible. It's FREE money.

*this means Starbucks, Sandwiches from Pret, dining out too frequently, expensive phone contracts, designer clothes, 1001 SKY TV channels with nothing on that you never watch, too much of the sauce, getting the latest model of gadgets, overseas holidays etc.

I'm not saying you do all (or any) of the above, but saving requires sacrifices. There's bound to be wastage somewhere, or you'd have a decent deposit by now.

pinkshoes

You earn £47k and live in your grandparents house.

Your take home pay (assuming pension and student loan payments) is around £2600.

Assuming your living costs are minimal, then your deposit of £30k is only around 15 months of saving!!!

Could you buy the house using a loan from your grandparents e.g. you borrow £170k and use your £30k deposit, and they then LOAN you the other £100k from the equity which you then pay off at say £1000/month.

They could leave a clause in their will saying any outstanding amount of the loan could be written off if all other debts are paid?

xylophone

Could you buy the house using a loan from your grandparents e.g. you borrow £170k and use your £30k deposit, and they then LOAN you the other £100k from the equity which you then pay off at say £1000/month.

He would need the lenders to agree to this - they might not be happy with this proposed arrangement. He could try a mortgage broker.

They would want a first charge on the property - the grandparents would have a second charge.

The grandparents would still need to pay CGT.

ACG

Have you spoken to a broker?

Lenders will lend different amounts and believe it or not, getting and extra £10-20k can be quite easy. Getting an extra £100k is much more difficult but we have done a mortgage where one lender would lend £0 others would lend £200k and another would do close to £300k.