Complicated!

llcooljayne1

Hi so looking for advice on a complex living situation!

I live in a house which my parents own the majority of and me and my partner have the remainder on a mortgage.

Eventually we would like to move on and get our own place but I know it won’t be simple due to them owning a large part.

We also have a secured loan on the property in our names so hoping we can move this with us to our next place.

the question is, if my parents wanted to stay in the property, do we essentially have to sell the house to them?

also, what are our chances of being able to remortgage.

we currently have:

£170,000 mortgage
£40,000 secured loan

partners income £45000
my income £30000

my parents own 70% of the property and we own the remaining 30%

House is valued at £700k

Thankyou for any advice. I find all this house business very confusing! And just want to know whether we should even think about moving or stay put.

MultiFuelBurner

Valued currently at 700k but is that realistic?.

So you have £210k before selling costs and £210k owing with 40k secured load and 170k mortgage left with redemption charges?

Doesn't look great but with 75k joint income and shared living you must be able to put a lot away into savings if you try hard for 12 months as long as you haven't spent it on car leases and other flashy PCP things?

Sarahspangles

All of the 30% you currently own is mortgage or secured loan, so if your parents bought you out then you’d have nothing left for a deposit once you’d cleared those, and you’d have some fees. So you need to get saving.

It’s possible to port mortgages and increase borrowing at the same time and that would be a way to repay your secured loan which is probably at a higher interest rate than the mortgage.

llcooljayne1

Thankyou. That makes sense. So my parents have said they will help us out with a deposit, we originally paid £582,000 for the house. How likely is it that we could port the mortgage? We are with NatWest. Also would the house have to actually go up for sale? 

llcooljayne1

Hi multifuelburner. No we haven’t got any car leases or anything. We both own our cars outright. We need to start saving while we are living together but even on our wages it seems to dwindle away. Maybe we are better off staying here and saving as much as we can.

MultiFuelBurner

You would have to talk to your lender to see if they will allow you to port the mortgage. Most do but always good to check especially if.the LTV loan to value is different on the property you are looking to purchase.

Personally it's a good time to save interest rates are 5% and the likelyhood(not certain) but house prices probably won't move much in the near future.

Sarahspangles

If you sell the house to your parents then it doesn’t go on the market.

The original purchase price of the house isn’t really relevant now so I’m wondering whether there is scope for misunderstanding.

Are your parents saying they will buy out your 30% which is £210k and also give you money for a deposit? Or do they think the price of the 30% will be £175k (give or take).

You need to look at the terms of the mortgage in relation to whether you can port it. If you’re on a fixed rate deal sometimes that complicates things. I doubt the bank will be happy with you trying to port a secured loan as well.

llcooljayne1

I think it will just be the £175k as we need to sort the secured loan so I’m hoping we can take it with us.

the house price range we are looking at is between £280k and £350k but not even sure if that’s doable?

we have a savings account but I need to shop around to get one with the best interest rates 

Sarahspangles

auntloo said:

I think it will just be the £175k as we need to sort the secured loan so I’m hoping we can take it with us.

the house price range we are looking at is between £280k and £350k but not even sure if that’s doable?

we have a savings account but I need to shop around to get one with the best interest rates 

If the house has increased in value by £118k since you jointly bought it, why aren’t you benefitting from that?  You’re giving your parents £35k of house.

If you’d bought a house for yourselves for £170k with a 100% mortgage and it had increased in value by the same proportion you’d have £40k of equity now.  Or you would have been able to extend your mortgage if you had needed to borrow and it probably would have been at a lower interest rate than a loan.

What are the ownership arrangements for the house now - are all your names on the deeds at the Land Registry?

llcooljayne1

This is why I need advice!

Yes they are on the land registry and the deeds. So could we take our share of any equity and use that as a deposit if we could take our secured loan with us when we remortgage?

Sarahspangles

You’re jumping ahead a bit.

The only way you will have equity is if your parents pay you 30% of the house’s current value which is £210k - if the valuation of £700k is realistic. They would actually need to find that either from savings or a mortgage themselves. Presumably when you bought it they couldn’t afford the house on their own which is why you were needed as co-owners.

You will also need to have saved a deposit by the time you approach the NatWest because at the moment you’re in debt - the equity is cancelled out by the secured loan - and they are highly unlikely to give you a 100% mortgage.

They’re even less likely to agree to you transferring a secured loan to the new house - both the bank and the secured loan provider will want to see that if they repossess, they will be able to get all their money back