Need to buy renter house and can’t get a big enough mortgage. Gutted

Whywontthiswork

We want to buy our rented house (if we don’t he will likely sell anyway) but prices have risen so much LL is asking for 30k more than we expected. We’ve tried 10+ brokers and gone to banks direct and just can’t get the mortgage we need and are £12k short (which isn’t easy to just save, would take us years). We have one Avenue which is the Nationawide helping hand, BUT the interest rate is high and my husband is old(er) so can only have a shorter term mortgage so the payments are £1500 a month and that just feels too much. Just feel gutted that I can’t make this work and now risk losing our ‘home’ and having to move the kids. We have good jobs, we have £25k deposit saved, good credit etc. We thought the 5% deposit was our saviour but it’s still not enough. It feels like every time we make progress with being ready to buy the house prices shoot up and we are back to square one again. Absolutely gutted. 

anselld

How do you know the asking price is reasonable?  Have you tried offering £15k below asking, bearing in mind the L would be saving estate agent fees and the possibility of a rental void whilst going to market.

powerspowers

How frustrating!
is there anything else you can throw at it, things to sell, family help, 2nd job for short term? I’m clutching at straws for you. 

How reasonable is the landlord, could you sit them down and talk through things? If they know you are serious about buying could they wait a year? 

FreeBear

anselld said:

How do you know the asking price is reasonable?  Have you tried offering £15k below asking, bearing in mind the L would be saving estate agent fees and the possibility of a rental void whilst going to market.

The LL would also save on eviction costs if he were to sell with vacant possession. Selling with a sitting tenant is going to reduce the pool of buyers which will be reflected in the price.

lookstraightahead

If I was the landlord I would be looking to give you a good deal. As a tenant you have a lot of protection, and given that you have the funds to buy 'somewhere' you aren't at the landlords beck and call for references etc. look into your rights and then go back with an offer you can afford and see what they say. They might want to sell, but your cooperation is key to them. They might also have unrealistic expectations of what the house is worth, as many vendors do. Also, lots of buyers won't touch a property with tenants in situ, because of the rights a tenant holds.

You're in a strong position here. You also have no chain so if you decide to buy elsewhere you have negotiation power. Indeed, you're not in a chain to purchase this one.

MEM62

There are a lot of plus points for the landlord if he works with you on this.  How much is you rent?  If he evicts you and sells he has a void period - perhaps six months or even more?  He might save estate agent fees but in many agreements he not only pays a monthly management fee but he also pays if a tenant buys so there may or may not be a saving there.  Also, with no chain the sale should be quick and smooth for him.  

Something to consider - I have just given my tenants notice as I wish to sell my property.  (Had enough of being a landlord)  Unfortunately, my tenants are far from being in a position to buy but, if they were, we could be talking about a circa £10K discount for them without me loosing out.     

Have a conversation with him and see what can be worked out.  

Slithery

MEM62 said:

... but he also pays if a tenant buys...  

I posted this in another thread recently to be informed that such charges had been illegal for a while now.

Whywontthiswork

Thanks all for your lovely comments, they made me feel a bit emotional. I should state that our lovely landlord has already knocked £20k off the price of the house as valued by 2 estate agents. Our estate has become very desirable and there are no houses for sale here so huge demand which is why I think the price has gone up so significantly. 2 other houses if they same size etc sold last year for £300 and 305 and they took a while to sell. He’s had ours valued at £365k and is offering it to us for £345k so a really good offer. We could pay £325-330 easily but anything over that is proving problematic. Our current rent is £1150pcm so we’re hoping to have a mortgage payment of £1250 maybe, but the nationwide offer would be £1500 and it’s just so much extra. I know we could move and buy a house elsewhere, but won’t get anything for cheaper than what has disounted the price to. Looked at help to buys in my local area too and they are no good as obscenely priced which means would STILL need a mortgage as the same amount we would need to buy this. Such a quandary we find ourselves in. 

There is no guarantee he will sell, but now he knows how much he can get I’m worried he will want to. My husband thinks we hold tight and see what prices are like next year and tell the LL that if things change then we can pay £325k at a moments notice if he changes his mind, but I hate the insecurity that comes with knowing he might turf us out (this happened to us in our last rented house and it frightened the life out of me and it’s embarrassing to be late thirties married with kids and always worried about being homeless). AND we’ve been trying to buy for so long now that I’m well aware that these prices keep rising and they likely will carry in rising pushing us further and further away. 

It’s a real frustration to me that the housing market works in such a way that disadvantages he. And I thought the 5a% deposit would make it easier but it really doesn’t. Need to borrow more which makes affordability harder AND interest rates are much higher. I’m so disappointed we haven’t found a broker who can find a lender to help, I thought it would be straightforward! 

I just needed to vent 

Slithery

The amount of deposit you have is only part of the equation, the rest is down to income multipliers.
What mortgage amount are you looking for as a multiple of your income?

Thrugelmir

Whywontthiswork said:

 2 other houses if they same size etc sold last year for £300 and 305 and they took a while to sell. He’s had ours valued at £365k and is offering it to us for £345k so a really good offer. We could pay £325-330 easily but anything over that is proving problematic. 

Why is your property worth so much more than those that took time to sell?  Keep on saving and see what develops. You never know what the future might hold. 

theoretica

Whywontthiswork said:

Thanks all for your lovely comments, they made me feel a bit emotional. I should state that our lovely landlord has already knocked £20k off the price of the house as valued by 2 estate agents. Our estate has become very desirable and there are no houses for sale here so huge demand which is why I think the price has gone up so significantly. 2 other houses if they same size etc sold last year for £300 and 305 and they took a while to sell. He’s had ours valued at £365k and is offering it to us for £345k so a really good offer.

This raises questions - if the only two houses sold recently sold for so much less what evidence is there for the present higher price?  Some estate agents do value properties optimistically high.  It might be worth discussing with the LL getting a proper valuation from a RICS qualified surveyor - not an estate agent sales person!  You would likely need to pay for this, and would want agreement from the LL that they would believe it...  Possibly two valuations - one with sitting tenant.