Complicated house buying

daga

Hi all,

I'm new to the forum and was hoping for some advice.

I've been living and working in UK for the past 7 years after originally come over with my parents. They're both self employed and in their early fifties therefore with a small chance of getting approved for a mortgage on the flat (just to add, we live in London so mortgage will be up from £300000). They have about £35000 of savings which they were hoping to gift me as a deposit for a flat. Hopefully by the time they retire, I would've paid off the mortgage and they could live there until they die rent free. After their death me and my partner would live there.
I hope this makes sense and I was wondering if it's even possible. I appreciate all advice and help.

[Deleted User]

daga wrote: »

Hi all,

I'm new to the forum and was hoping for some advice.

I've been living and working in UK for the past 7 years after originally come over with my parents. They're both self employed and in their early fifties therefore with a small chance of getting approved for a mortgage on the flat (just to add, we live in London so mortgage will be up from £300000). They have about £35000 of savings which they were hoping to gift me as a deposit for a flat. Hopefully by the time they retire, I would've paid off the mortgage and they could live there until they die rent free. After their death me and my partner would live there.
I hope this makes sense and I was wondering if it's even possible. I appreciate all advice and help.

Have your parents engaged a mortgage broker to find out if a mortgage is definitely off the table for them?

Most if not all lenders will have an issue with a gifted deposit coming from those who will occupy the property. Do you propose charging your parents rent to help cover the cost of the mortgage? Do you already own your home or any other properties?

daga

Thank you for reply.
We're not at the stage of mortgage brokers just yet. But their income is about 2/3 of ours and basic calculations I was checking with banks suggest i will just about get the money we need. So I can't imagine they would be accepted for the same amount.

G_M

Where do you currently live? Do you have a mortgage?
So you plan to buy this flat, based on your income for a mortgage + deposit received from them?
This would be your first or second property?


Getting a mortgage for a property you do not plan to use as your main home is not the norm.
You might need a BTLmortgage, but these usually specify you can't let to family.
But if there's no rent, it's not a tenancy, so maybe you'd need a 2nd home mortgage, or even one more specialist.
So yes, speak to a specialist independant mortgage broker.


Who will maintain the property? Repairs and improvemets? Utility bills etc?


What would happen if you were made redundant, became sick/had an accident and could not work? How would the mortgage be paid? How would parents managed if the property was repossessed?
Are and partner married? What if you divorced and she claimed half your assets (including the property? Unlikely of course but......



How old are they? How long till they pop off and you can make it your home?

steampowered

There are lots of pretty big practical problems with this:

- A normal mortgage the lender will expect you to live in the property and for the property to be in your name.

- You would need a salary of about £65k to get a £300k mortgage. Do you earn that?

- Do you already have a mortgage or are you planning to get one? You can't easily get a second mortgage.

- Do you own another property? If so, you will pay higher rate stamp duty when you buy the flat.

- If we assume your parents are 50 and want to retire when they are 65, that only gives you 15 years to pay off the mortgage. For a £300k mortgage on a £335k property over 15 years you'd be paying around £2k a month at the cheapest current rates.

daga

Hi
-I will be living in the property until my parents retire, which most likely won't be when they 65 because they won't earn enough of pension to survive (please remember that they've only been working in UK for 7 years). They are planning to work as long as they have the strength and health to do so.
-Mine and my partners combined salaries are around 56k which according to calculations on my bank's website is enough for around 280-300k mortgage with 35k deposit.
-i don't have a mortgage. I'm renting a flat with my partner in Wandsworth, SW London. We're not married.
-I don't own any property.

Mutton_Geoff

Your parents could live upwards of another 40 years yet. Have you factored that into your decision making or does "early 50's" mean "one foot in the grave" to you?

daga

Thank you all for replies.
I just started to think, what if I buy the flat with my father as a second mortgage applicant? Would it not matter then that he pays for deposit and I pay off the mortgage? And either them or us living there as it's not really renting as we're both on the mortgage application?

xylophone

Is the idea that your parents give you £35,000 as the deposit on a flat which you and your girlfriend will buy (with mortgage) and occupy?

You and she will move out when your parents retire and they will live there?

You would seek permission from the lender to rent the property to them?

Where would you live?

steampowered

daga wrote: »

Thank you all for replies.
I just started to think, what if I buy the flat with my father as a second mortgage applicant? Would it not matter then that he pays for deposit and I pay off the mortgage? And either them or us living there as it's not really renting as we're both on the mortgage application?

This might be OK, but:

- The property would have to be owned by the same people who are on the mortgage, so you would get hit for higher rate stamp duty if you bought a different property of your own.

- You would be unlikely to get a mortgage for a property of your own on another property as you'll already have a mortgage on this property.

- You could be looking at paying capital gains tax when the property is sold if it isn't your primary residence.

Cakeguts

You and your parents need to move out of London and work in a different part of the country where housing is cheaper. Living and working in London is actually and extremely bad idea if you don't earn a top salary. I assume your parents came to the UK because that is where their work took them? It would be a bad idea to move to London from somewhere else just to get work because London is very expensive and there are other cities in the UK that are cheaper to live in.