Buying Parent's home

Jimmy1972

Hi all,
I'm 51 and for health reasons have missed the boat on home ownership.
I receive disabilty benefits, a war pension and army pension, and have found a broker who will help me get a mortgage.
Here is my question:
My parents have the house they have moved out of, up for sale at 185k. They have an offer of 175k but have told me they will sell it to me for 120k.
I would like to know how gifted equity would come into play, if at all.
I would also like to know if it is better that my parents take the house off the market or not?
 The broker I approached said it would work in my benefit, from a potential lender's point of view, if the house was listed at the higher price than I'm asking to borrow.
I'm finding this all overwhelming and would love advice on anything related to my situation.
Thanks so much

amnblog

If you have questions you should refer to your Broker who presumably knows your situation.

The bottom line is that for some Lenders a value/purchase price of £175,000 with your Parents wanting just £120,000 from you means £55,000 gifted deposit. Some Lenders will request no further deposit from you, some will also require some cash deposit from your own funds as well.

If you are buying from your Parents they should be some legal advice on the matter as it could cause a problem if either of them were to die, or need to go into care in the short term.

Lastly, the Estate Agent may still charge your Parents for the sale to you.

Jimmy1972

Thank you. I have a 20k deposit. Your advice is appreciated 👍👍

Jimmy1972

amnblog said:

If you have questions you should refer to your Broker who presumably knows your situation.

The bottom line is that for some Lenders a value/purchase price of £175,000 with your Parents wanting just £120,000 from you means £55,000 gifted deposit. Some Lenders will request no further deposit from you, some will also require some cash deposit from your own funds as well.

If you are buying from your Parents they should be some legal advice on the matter as it could cause a problem if either of them were to die, or need to go into care in the short term.

Lastly, the Estate Agent may still charge your Parents for the sale to you.

Thanks for the advice! I have a 20 or 23k deposit, but are you saying soklme lenders might treat the difference as a deposit? I can't work out, if that was the case, how much of a mortgage I would require.
Thanks again

kingstreet

If you concessionary purchase from them at £175,000, £55,000 is gifted, eg £20,000 your deposit leaving you needing to borrow £100,000.

Keep_pedalling

Your parents are effective gifting you £55k of the equity in the house which is basically the same as you having a £55k deposit.

If you had a choice of houses to buy, would you choose this house? If not the better option is for your parents to sell gift you the £55k from the proceeds to use to buy a home of your choice. 

Jimmy1972

Keep_pedalling said:

Your parents are effective gifting you £55k of the equity in the house which is basically the same as you having a £55k deposit.

If you had a choice of houses to buy, would you choose this house? If not the better option is for your parents to sell gift you the £55k from the proceeds to use to buy a home of your choice. 

It's my dream house! 

Keep_pedalling

Jimmy1972 said:

Keep_pedalling said:

Your parents are effective gifting you £55k of the equity in the house which is basically the same as you having a £55k deposit.

If you had a choice of houses to buy, would you choose this house? If not the better option is for your parents to sell gift you the £55k from the proceeds to use to buy a home of your choice. 

It's my dream house! 

Well that makes things easier  

Jimmy1972

kingstreet said:

If you concessionary purchase from them at £175,000, £55,000 is gifted, eg £20,000 your deposit leaving you needing to borrow £100,000.

I don't understand this. How would my parents get 120k in this example? The lender will actually class equity as cash which would be paid to my parents along with the 100k I'd be borrowing?

kingstreet

On completion day, your solicitor will have the £100,000 mortgage funds and your £20,000 deposit. That's £120,000 which will be transferred to your parents' solicitor.

user1977

Jimmy1972 said:

kingstreet said:

If you concessionary purchase from them at £175,000, £55,000 is gifted, eg £20,000 your deposit leaving you needing to borrow £100,000.

I don't understand this. How would my parents get 120k in this example? The lender will actually class equity as cash which would be paid to my parents along with the 100k I'd be borrowing?

Where did you think your £20k would be going?