Buying house with annexe for parents

Lunafish

We are looking to buy a house with an annexe with/for my husband's retired parents.

Using the money from the sale of their house as a deposit and us mortgaging the rest. 

Eg £250000 deposit £250000 mortgage

Has anyone else done this? What should we be aware of? 

I'm sure it won't be a straight forward process, as these things never are.

user1977

Who's going to be the owner? Lenders tend not to like (a) elderly borrowers (if the in-laws are going to be joint owners then they'll also need to sign the mortgage), or (b) properties with annexes. And if the in-laws aren't going to be owners, what security are they going to have about the cash they're giving you or having a place to live?

K_S

@lunafish Limited to the mortgage aspect of it -

- You need a lender that is fine with the annex and the particulars (attached to the main house, separate, size, etc).

- If the mortgage is going to be only in your names, then the lender also needs to be ok with the parents gifting the deposit and living in the property.

- If the parents also need to be on the deeds (in which they will also need to be on the mortgage) then you need a lender who will have 4 applicants on it and ignore the parents' age for the purposes of the term.

Lunafish

K_S said:

@Lunafish h Limited to the mortgage aspect of it -

- You need a lender that is fine with the annex and the particulars (attached to the main house, separate, size, etc).

- If the mortgage is going to be only in your names, then the lender also needs to be ok with the parents gifting the deposit and living in the property.

- If the parents also need to be on the deeds (in which they will also need to be on the mortgage) then you need a lender who will have 4 applicants on it and ignore the parents' age for the purposes of the term.

Thanks for answering @K_S . Why do mortgage brokers not like annexes?

K_S

@lunafish I love annexes Brokers don't have a say in what lenders do or don't accept.

Lenders on the other hand have different policies specific to each lender. Some of them are fine with annexes.

Lunafish

K_S said:

@lunafish I love annexes Brokers don't have a say in what lenders do or don't accept.

Lenders on the other hand have different policies specific to each lender. Some of them are fine with annexes.

😂 I meant lenders. 

Annisele

One of the reasons is that from a lender's perspective, an annexe might increase the risk that it would hard for the lender to repossess the (whole of) the property.

The lender is lending a bunch of money secured against the whole property. In the lender's eyes, if everything goes well the borrower will make all the contractual payments on time. But if borrower doesn't pay, then in an ideal world the lender wants to repossess quickly and easily then sell the property for more than the outstanding loan.

Annexes can complicate that. If the annex has been let has an entirely self contained unit, then the person living in the annexe might technically be the borrower's tenant rather than lodger. And repossessing a property with a (potentially faultless) tenant in it is more hassle for lenders than repossessing one with just the (non-paying) borrowers.

It's not impossible for lenders to repossess properties with tenant-dwelling annexes, and some of them are perfectly happy to take that risk. Some lenders may also have slightly narrower definitions than others as to exactly what an annexe even is.

[Deleted User]

was going to write something but Annisele said pretty much everything anyway.   Most lenders want an easy life is what it comes down to