NatWest Mortgage Application Help Complicated

snoop321

Hi everyone,

This is on behalf of a friend who has never had mortgage and is quite new to borrowing.

He is to buy his parents property, for £145000 the property is actually worth £250000. He wants to borrow £145000 because that is the current mortgage on the property left.

out the blue he had a call from NatWest even though his phone appointment is next week. They are fine with the situation of him buying from his parents. However, they tapped into his saving as he has accounts with them and asked for a deposit. Originally he was only going to do 5% at a must but after they looked at his saving the want £20,000 all of a sudden.

Now the question I have, if he has nearly £95,000 equity in the property why are they asking for such a deposit and where does this deposit go? The mortgage he gets pay his parents mortgage in full but  where does his deposit go? 

Can someone help?

p00hsticks

Can you clarify - is he buying the property to live in himself, for his parents to live in , for them to live in together or something else ? 
Are the parents effectively gifting him the equity they have in the property ?

snoop321

p00hsticks said:

Can you clarify - is he buying the property to live in himself, for his parents to live in , for them to live in together or something else ? 
Are the parents effectively gifting him the equity they have in the property ?

They are all living together currently and that won’t change. His parents don’t want the headache of paying the mortgage anymore. Yes they are gifting him the equity.

secla

Usually the equity/discount would be the deposit, unless his affordability doesnt cover the 145k he wants to borrow ?
Have the bank done a valuation yet ?

snoop321

secla said:

Usually the equity/discount would be the deposit, unless his affordability doesnt cover the 145k he wants to borrow ?
Have the bank done a valuation yet ?

He’s not had a full appointment yet to see if they can actually go ahead but they said 145k is not a problem. Not had the bank value the house but that exceeds what he is asking for.

That’s what I don’t understand. If affordability was a problem, wouldn’t they say we just can’t borrow you this much but we can borrow you X?or say we can borrow you £125000 but you will have to use your savings of £20,000 to cover the amount you need.

im just thinking how a deposit would work in this scenario. He gets 145k and pays 20k deposit, where’s the deposit gone?

He’s well panicked from the phone call today which he didn't expect and now wants me to sit in with the meeting with him next week.

Neilos9

Clearly he is only going to get 125k from Natwest....
If your Friend does not know what they are doing, and is Asking you for help, the help you should give is directing them to a broker who is qualified to help, and will have done this countless times before.....
You don't take your Car to a hairdresser to fix it....

silvercar

Neilos9 said:

Clearly he is only going to get 125k from Natwest....
If your Friend does not know what they are doing, and is Asking you for help, the help you should give is directing them to a broker who is qualified to help, and will have done this countless times before.....
You don't take your Car to a hairdresser to fix it....

 Broker isn’t going to be interested if he already has his mortgage application in with NatWest.

Either his income isn’t sufficient for more than £125k mortgage or maybe NatWest have misunderstood the whole set up (maybe the application was filled in incorrectly and OP wrote the purchase price as £145k rather than as £250k with a £105k gifted deposit?). 

snoop321

silvercar said:

Neilos9 said:

Clearly he is only going to get 125k from Natwest....
If your Friend does not know what they are doing, and is Asking you for help, the help you should give is directing them to a broker who is qualified to help, and will have done this countless times before.....
You don't take your Car to a hairdresser to fix it....

 Broker isn’t going to be interested if he already has his mortgage application in with NatWest.

Either his income isn’t sufficient for more than £125k mortgage or maybe NatWest have misunderstood the whole set up (maybe the application was filled in incorrectly and OP wrote the purchase price as £145k rather than as £250k with a £105k gifted deposit?). 

silvercar said:

Neilos9 said:

Clearly he is only going to get 125k from Natwest....
If your Friend does not know what they are doing, and is Asking you for help, the help you should give is directing them to a broker who is qualified to help, and will have done this countless times before.....
You don't take your Car to a hairdresser to fix it....

 Broker isn’t going to be interested if he already has his mortgage application in with NatWest.

Either his income isn’t sufficient for more than £125k mortgage or maybe NatWest have misunderstood the whole set up (maybe the application was filled in incorrectly and OP wrote the purchase price as £145k rather than as £250k with a £105k gifted deposit?). 

Firstly thanks for everyone's response.

You are absolutely right thats whats he's done saying he's buying for £145 rather than 250 with the equity.

I would not have thought he would have a problem getting the amount of money he's under 30 earning approximately 38k with no debt which baffled me when he said they wanted 20k deposit. In my eyes it was a pretty straight forward application 

amnblog

NatWest should lend £145,000 without deposit and on the income stated.

You say your friend has not had a full appointment to progress the application yet.

Your friend should stop messing about an consult a mortgage broker with experience of this situation which we can concessionary purchase.

[I appreciate it sounds counter intuitive to not deal direct with the Lender but you will find that many staff with many lenders have very limited experience and knowledge]

RedFraggle

Your friend also needs to consider what will happen should parents need to go into care. He's also forfeiting his status as a first time buyer and any benefits that would give him purchasing a property in the traditional sense. I also assume, but one never should, that they are an only child. 
What if they want to settle down with a partner in future? Or move location because of employment. It's unlikely his parents could buy out his share.
Honestly I think it's a bad move but if they've considered all that then fair enough. 

snoop321

I guess he feels he’s paying for everything anyway right now and he would like to formalise it. His parents have agreed and thats up to them to deal with the headache later. I shall still explain the drawbacks from this as most people are right he will be stuck in limbo if he at some point decided to relocate he will have his parents in tow because they won’t be able to afford anything else.