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Buying from family member without a mortgage
Betula26
Posts: 2 Newbie
My brother owns a house which he would like to sell. I would love to buy it but I don’t have a deposit so can’t get a mortgage from a bank. Is it possible for me to buy the house by paying him off on a monthly basis, including a bit extra as ‘interest’. In effect I would pay this off in the same way as I would pay a bank or other lender, over a period of years. I can see there are risks involved for both of us eg he changes his mind or I become ill and can’t work.
has anyone tried this? Is it possible?
thank you
has anyone tried this? Is it possible?
thank you
0
Comments
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Has he said that he's happy to do this?1
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Does your brother need to buy another house to live in?MFW 2021 #76 £5,145
MFW 2022 #27 £5,300
MFW 2023 #27 £2,000
MFW 2024 #27 £6,055
MFW 2025 #27 £3,100/£5,0001 -
Yes, there are no particular legal problems with setting something like this up. It seems somewhat risky from your brother's point of view, if the banks don't think you're creditworthy enough to afford to buy a house - and consider the family dynamics if you default on your payments and he's entitled to repossess...2
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Thanks all. No I haven’t asked him yet cos I wanted to see if it is even possible to do it. He has his own home so doesn’t need to buy one. The one I’m talking about was my parents home where we grew up. I’m emotionally attached to it ❤️0
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This is going to depend on your relationship with your brother I would think. But on this linited info. it doesn't seem a particularly good thing from his point of view though. But we don't know the details, maybe he would be delighted to help you achieve your goal, how can we know?
How many years do you expect to be "paying him off, with a bit extra for interest" for?
A couple of years? 5? 10? Decades? Feb 2008, 20year lifetime tracker with "Sproggit and Sylvester"... 0.14% + base for 2 years, then 0.99% + base for life of mortgage...base was 5.5% in 2008...but not for long. Credit to my mortgage broker0 -
Are you entitled to half the house or did he buy it from your parents?0
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Would it be an option for your brother to lend you the money for the deposit? That way you could secure a mortgage and pay him back the deposit?
I have no idea whether you could set up a mortgage type arrangement with him but it's worth exploring. If you agree to pay some interest (I would expect mates rates) then he will get more for the house overall than if he sold to a regular buyer.
Definitely seek legal advice and make sure everything is in writing whatever you decide.
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It would need to be a giftMaria85 said:Would it be an option for your brother to lend you the money for the deposit? That way you could secure a mortgage and pay him back the deposit?
I have no idea whether you could set up a mortgage type arrangement with him but it's worth exploring. If you agree to pay some interest (I would expect mates rates) then he will get more for the house overall than if he sold to a regular buyer.
Definitely seek legal advice and make sure everything is in writing whatever you decide.3 -
Brother couldn't lend the OP the deposit if they need a mortgage.
He could GIFT it to the OP, but if the mortgage provider was prepared to accept a gifted deposit, they would require a guarantee from the brother that it is a gift NOT a loan.If you've have not made a mistake, you've made nothing2 -
A loaned deposit by a family member, secured over the property or by deed of trust is acceptable to some lenders.
Alternatively, if he is prepared to give up some of the value, a concessionary purchase/gifted equity transaction is possible.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.1
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