RTB and mortgage

Misteek

Hi guys

My neighbour wanted to know, he's about 62 yrs old . He doesn't work.

But wanted to know if he exercised his right to buy and gor a discount of 40 percent as he's lived there for some time. (Before the government changes take place).

Can he have a friend to take a mortgage out. Would a lender allow that. His friend works etc. The owner of the property as per rules will still be my neighbour. 

How would this work ?

sammyjammy

It wouldn't work, it contravenes the rules

Misteek

sammyjammy said:

It wouldn't work, it contravenes the rules

Which rules? The council are happy for someone else paying it for the tenant . However does it affect the mortgage rules ?

FlorayG

You can't get a mortgage on a property you don't own, because the property is security against the loan

Misteek

FlorayG said:

You can't get a mortgage on a property you don't own, because the property is security against the loan

I see but i heard he can take a mortgage as a joint borrower and sole proprietor . The only issue is the tenant is 60 plus and on benefits ie universal credit and enhanced level pip. The second applicant ie tge supporting applicant that won't be the proprietor is working.  Could this not be done with a specialist broker ?

GrumpyDil

Why does the tenant want to buy the property which means he will become responsible for all maintenance and other costs when he presumably currently has a lowish rent and repairs done for him. 

I'm just wondering if he isn't working where the money for any repairs will be coming from?

ACG

You want a joint borrower, sole proprieter mortgage on a right to buy property where one of the applicants (the one living in the property) is not working and is also going to mean the mortgage takes them over 70-75 presumably? 

When we get complex mortgages, we often have to divide up the problems and its not too difficult to find a lender who will overcome one of the problems but when you have a lot combined it makes it difficult. 

Besides that, you also have someone who is currently very secure with their tenancy. They will then be at the mercy of their friend - what happens if they want to take their name off the mortgage? What happens if there is a problem with the property, who pays for it? What happens to any benefits your friend is in receipt of? 

I doubt this can be placed in all honesty. But as a broker, there is no way on earth I would go near it. I could never defend a complaint if it came in. 

diggingdude

Whilst we would all like to take advantage of a discounted purchase, your neighbour would likely be best served remaining a tenant with all the benefits that brings someone at their age and income. Is the friend expecting to own it after the neighbour dies?