Mortgage - Parents 4 March at 6:56AM in Mortgages & endowments 8 replies 500 views

SID101

Hi All - my parents who are retired with a combined income of c£24k per annum need to release £100k from current home by getting a mortgage and renting it out which will more than cover the rent. However they will not be moving into their own property as they will move in with me. This is causing issues as 1) They are not moving into a forwarding property which they will own & 2) There personal income is below £25k for most BTL mortgages. Does any one know which mortgage companies could possibly assist in this scenario? Many Thanks 

housebuyer143

SID101 said:

Hi All - my parents who are retired with a combined income of c£24k per annum need to release £100k from current home by getting a mortgage and renting it out which will more than cover the rent. However they will not be moving into their own property as they will move in with me. This is causing issues as 1) They are not moving into a forwarding property which they will own & 2) There personal income is below £25k for most BTL mortgages. Does any one know which mortgage companies could possibly assist in this scenario? Many Thanks 

Normally BTL mortgages can be self funding so you don't need an income but your parents also want to go let to buy and have no onward property so you are really narrowing the pool of lenders you can have. 
Why don't they just sell the house if they need money from it, what is the ong term plan? 

I would personally look at a local specialist BTL mortgage broker who will be able to very quickly tell you if what they want to do is viable.

SID101

Thanks - the reason for releasing equity is so they can gift and help in my purchase where they will also be living. The equity being released is a very low LTV proportion.

dimbo61

Would it not be better for your parents to sell the property  and have money in the bank.
They could buy a smaller property  with cash and gift you £100K 

Sea_Shell

Have they acquainted themselves with all the legalities and hoops of being landlords?

Linton

Have your parents worked through the implications for their housing and financial security?
 - What happens if the house you buy needs to be sold because you die, become bankrupt, want to move etc etc.
 - What happens if you fall out and they or you decides you cant live together?
 - Would they own any of the equity in "your" house?
 - What happens if there is a gap in the BTL tenancy or a tenant stops paying?

Keep_pedalling

Some sober reading for anyone considering this as a good idea for their parents.

https://forums.moneysavingexpert.com/discussion/6424417/bailiffs-are-our-last-resort/p1

SusieT

Sometimes BTL is seen as the "easy" option for people who have been living in a home for a long time and have an emotional attachment to it. Raising the funds against it will be answered by a broker, but with all the rules that are being proposed, plus the negatives seen in the thread linked to and also what I know a friend of mine has gone through (dog poo and urine on carpets and human urine in bottles being two of the more outstanding things, I would seriously advise against it for what sounds to be an elderly couple. 

Annisele

SID101 said:

Thanks - the reason for releasing equity is so they can gift and help in my purchase where they will also be living. The equity being released is a very low LTV proportion.

That "gift and help in my purchase where they will also be living" sounds like it could cause significant issues. Will they really be making a "gift", or will they actually be handing over money in exchange for the right to live in your property?

If you are going to need a mortgage for your own property (in additional to your parents' "help" / "gift"), then I suspect the plan is a non-starter if your parents aren't going to be named on your mortgage. That's because the possibility that your parents will have an interest in the property is likely to spook lenders. If your parents are going to be named on your mortgage and deeds, that might produce different issues (including additional stamp duty).

Regardless of the specifics, it looks as though you're wanting to do something quite unusual. And unusal scenarios tend to benefit very much from the input of a good whole of market broker.