Mortgage help - taking over a parents mortgage

Hollypops1989

Hi there,

I wondered if anyone could help me with a mortgage query that ive not necessarily been able to find on the forum.

My dad has a 3 bed house which has approx £50k left on the mortgage. He is struggling financially and just about making mortgage repayments. The house is currently in a horrendous state - like a squat. Unfortunately he doesn’t have enough money to make the repairs to fix the house up and is barely making ends meet.

Is there anyway around this so we can help?
My partner & I currently private rent. Our rent is £1200 a month so we can afford mortgage repayments but cannot afford to save up for a deposit large enough for a mortgage. Is there anyway we could get a mortgage for example for £100k and buy my dad out for the remaining £50k on his mortgage and use the leftover £50k to make repairs to the house?

I understand we would need at least 5% deposit even for the £100k but could we then use this to buy him out for his remaining mortgage amount rather than at a market value/selling value price?

I hope that makes sense.

Any help would be much appreciated and greatly received

unforeseen

Where does your dad move to?

BoGoF

How much is the property worth.....before and after 'repairs'?

Hollypops1989

Well I’m hoping he could stay with us and we could eventually convert the garage for him

Hollypops1989

In its current state on the market it’s probably worth between £210-£220k after repairs probably about £285k

getmore4less

Does your partner want to live with your dad?

One option would be to own it 3 ways.

That would be around £70k each on current value(£210) + you need to raise the funds to fix it up lets go with £60k to give a bit of contingency on your £50k

That would be each of you in for £90k.

you raise £110 on a mortgage leaving £60k cash and pay that mortgage 3 ways.(you each have £36.6...k worth)

dad gifts you each £53.3...k

You each are in for £90k you have £60k in cash and own the place 1/3 each.

Hollypops1989

My partner has no problem with it. It’s just a very desperate situation that we need to try and help him out of quite quickly.

I have suggested he just sells the property but it needs some work doing to it beforehand - even just basic house clearance and a tidy.

I read something about a favourable purchase agreement but not sure if that information is up to date or applicable here. Thank you for your advice so far

foxy-stoat

I think your Dad needs some finance/legal advice. He would effectively be selling his £220,000 - £250,000 home for £50,000 and living in a garage in someone else's property, assuming you get permission to turn the garage into a bed room.

The way to do it would be to all 3 of you get a mortgage, deed of trust that splits out the shares and who owns what equity or sell it as it is, it will sell for the right price, and buy a place outright for him that meets his needs.

Retired_Mortgage_Adviser

Conservatively, let's say the house is worth 200k with an outstanding mortgage of 50k. Hence your father has 150k of equity in it.

If you can't afford a deposit but can afford mortgage repayments (say a 90% LTV mortgage), one option available is for you to buy the property from your father for an agreed BMV sale price of (say) 180k, thus gifting you the 20k equity.

There are lenders that will allow an equity gift to be used as a deposit, thus allowing you to get a 90% LTV mortgage on the property without having to put down any more cash as deposit. Your father gets 180k cash and can buy a suitable place outright within that budget.

Just to be clear, I make it sound way easier than it is. This does require having the right lender, paperwork, etc and will be further complicated if your father intends to live in the property after selling it to you.

csgohan4

deprivation of Assets may come into play with gifted equity should he need care in the future