What type of loan/mortgage would I need?

Sprizmo89

Good Afternoon,

I hope you can help me.

I currently live with my mum in her mortgage free house in Havering and are looking to downsize to a new build out in Essex. When we put the house on the market July last year, we were expecting £575k-600k for the house and the house we want to move to was £550k so not an issue with £30k-ish costs etc being covered by the house sale etc.

We have just been advised to lower the price of our house to £550k-£575k and the house we want to move too is now £540k which is more than likely going to mean that the £25k-ish cost to move house is not going to be covered by the house sale.

I am quite fortunate to have a stable job and am looking into the possibility of taking on the difference or even taking on £30k-50k off the total to give her some extra money for retirement, holidays etc.

I believe this is possible but before I go and see a financial advisor, I thought I would ask this forum as it seems very helpful. Would this be a mortgage option or a loan? I’m not overly fussed about being on the deeds but would be happy to if it’s a requirement.

Apologies for the naivety but never moved house before and my mum hasn’t moved for 40 years so this is all a bit new for us both.

Thank you for your time.

El_Torro

When it comes to mortgages the lenders tend to set a minimum amount of how much they will lend. Last time I checked it was £25k so assuming this hasn't gone up then a £30k to £50k mortgage shouldn't be a problem for you. 

A mortgage will be a lower interest rate than an unsecured loan. Also a bank might be very reluctant to lend you £30k plus as an unsecured loan. If you're comfortable that you will repay the mortgage I would go that route rather than a loan. 

Albermarle

I believe this is possible but before I go and see a financial advisor, I thought I would ask this forum as it seems very helpful.

This situation is not one a financial advisor would be interested in . They are primarily involved in investments, pensions, retirement planning etc. They do not normally get involved in mortgages or loans.
If you do decide on a small mortgage, you may want to see a mortgage broker, although probably just as easy to do it yourself.

and are looking to downsize to a new build out in Essex. 
Most people downsize to release money, but seemingly not in this case.

dinosaur66

i switched propertys in a similar situation many years ago i had a 

minumum mortgage loan back then was 25k so thats what i took out 25k

it was an interest only mortgage with no strings attached with abbey national / i was early 30s so they gave me a 25 year mortgage /  no fees and moved property 

i forget the interest rate and monthly payment i think it was around £100 a month to start

i overpaid monthly whatever i had spare /  /  then when i had paid the money nearly all off i left the balance of the mortgage at £100 or something like that paying 50p a month interest as i could and did use the capital again for doing a loft conversion where i again withdrew the 25k on that mortgage and paid it back exact same way again and after that i paid it off and had to pay the closing fees which i think were about £400

Herzlos

Who's name is the house going to be in?

I'm assuming for inheritance reasons you probably want it in just your name, which means your mum would sell the old house, gift the money to you to use as a deposit on the new house, and you'd take out a mortgage on the rest. That saves any issues with changing deeds or anything later. 

You'd need to see a mortgage advisor to find you a suitable mortgage, but you'll get a pretty good rate given how little you're borrowing compared to the value of the house. 

Sprizmo89

Appreciate the comments so far. I’ll take a look into the different type or mortgages then and see what we can do. 

_Penny_Dreadful

Sprizmo89 said:

Good Afternoon,

I hope you can help me.

I currently live with my mum in her mortgage free house in Havering and are looking to downsize to a new build out in Essex. When we put the house on the market July last year, we were expecting £575k-600k for the house and the house we want to move to was £550k so not an issue with £30k-ish costs etc being covered by the house sale etc.

We have just been advised to lower the price of our house to £550k-£575k and the house we want to move too is now £540k which is more than likely going to mean that the £25k-ish cost to move house is not going to be covered by the house sale.

I am quite fortunate to have a stable job and am looking into the possibility of taking on the difference or even taking on £30k-50k off the total to give her some extra money for retirement, holidays etc.

I believe this is possible but before I go and see a financial advisor, I thought I would ask this forum as it seems very helpful. Would this be a mortgage option or a loan? I’m not overly fussed about being on the deeds but would be happy to if it’s a requirement.

Apologies for the naivety but never moved house before and my mum hasn’t moved for 40 years so this is all a bit new for us both.

Thank you for your time.

This isn’t going to be as straightforward as you think. Is the current house solely in your mother’s name which means all the equity (deposit) for the new home is coming from her? You’ll then need to use that equity to get a mortgage and your mother can’t simply gift it to you as lenders don’t like the deposit coming from someone who’ll be residing in the property but not party to the mortgage. The mortgage will be secured against the title. 

HSBC used to, they might still do, some funky mortgages where both you and your mother would be party to the mortgage but only you would be responsible for the repayments. I’ve even heard of one where the mortgage was secured against someone else’s title entirely. You’re going to need a good mortgage broker to help you with one. Perhaps one of the mortgage brokers who regularly post on the Mortgages & Endowments board could help. 

PS I’m not recommending that you go to HSBC. 

dinosaur66

the mortgage required is just 25k and you have a good job

thats 5% of the house value

just get the mortgage in your sole name

i cannot imagine a scenario where you would be turned down for a mortgage

i will not advise on share of equity in property thats your business

my situation was reversed

i bought my property 50/50 with my mother and father many years ago

i paid all 250k deposit at the time despite house being 50 /50

i did this because at the time inheritance tax threshold was 240k and i never took any financial advice .

they both lived in another house i owned outright in stratford

i then took out the 25k interest only mortgage in my sole name

i remember what i presume was a manager coming up to the bank girl and me and actually offered me up to 150k when i was only asking for 25k

i only wanted 25k and thats what i went for

too long ago to remember if any questions were asked about my mothers circumstances or joint ownership but if there were they were minimal

i still live in the same house with my mother about 20 miles from you

one thing i did not know or think of when i bought is is that when you reach 60 the house becomes exempt from any care home fees although in my case that is moot because i am able to look after her myself and have the funds to afford any home help if it were ever needed.

kingstreet

https://forums.moneysavingexpert.com/discussion/comment/81855690#Comment_81855690

HSBC stopped the A2 Indirect Charge several years ago. I have had a thread running on it for years if you search.

monkey-fingers

https://forums.moneysavingexpert.com/discussion/comment/81855258#Comment_81855258

Why could they not simply be joint tenants?

kingstreet

https://forums.moneysavingexpert.com/discussion/comment/81856726#Comment_81856726

Joint owners means a joint mortgage. See my comment re HSBC A2 Indirect Charge which was the last route to having more owners than borrowers.