Gifting/Buying parents' House
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Yes, re-read the original post. I already have a property, and I'm pretty sure I need a BTL mortgage. I assumed that in order to get a BTL, you had to show (or they would check) that the rental income in the area for this type of property is >125% of the interest repayments. Anyway, I have sufficient income from my business that I'd be able to cover repayments if the property were empty (I presume my own income is factored in as the broker required information from my accountant).
No need to be such a !!!!!!. I did read your OP and nowhere in the post did you say that your parents were going to be moving out of the property and that you were going to let it.
What law do you think is being broken by letting a property to your parents?0 -
No need to be such a !!!!!!. I did read your OP and nowhere in the post did you say that your parents were going to be moving out of the property and that you were going to let it.
Language please. I'm not here to cause an argument. If you're offended by what I wrote, then I'm sorry, that was not the intention honestly. However, if it makes you feel better, then you can continue insulting me with your sly comments. I'm just here for some advise, I'm not a mortgage expert by any stretch.Parent's home valued at £300,000 with a mortgage of £60,000. They want to gift the property to me. I already have a property so this would be a second home. What would be the best way to do this and what costs would be involved?
- How much could I realistically borrow, and what would determine this? As a BTL, I presume mortgage providers would have a max. LTV that I could borrow at? Would my own income or any other loans/mortgages be taken into account?
I figured the only way I could buy a second home with a mortgage would be by getting a buy-to-let (BTL) mortgage, and thus the whole application process would be taken on the basis of me buying the property to let out. If it's possible to get some other kind of mortgage - one based on my own income, then I'd be keen to know more.
Anyway, moving on.What law do you think is being broken by letting a property to your parents?
I don't know, just my mortgage broker advised me not to do this. It's not a problem anyway, it's something we considered, but it won't happen (I was just replying to getmore4less).0 -
Sorry to just question one aspect. You are paying your mortgage broker £2700?
Interesting. Sounds like I'm being ripped off. Ok, I might as well post the exact response from the broker, and you can decide.Fees
Application / valuation £1455.00 – payable now
Legal fees approx. £1,000 – normally £200 payable up front - balance payable prior to completion
Stamp Duty - £22,000 (including 3% second property surcharge)
Lenders fee £4125.00 – deducted from the mortgage advance
Our fee £2750.00 – payable on the day the mortgage offer is received by you
There you go. (this is actually based on sale price of £400,000 - but I presume the fees wouldn't be much different if it were £300,000). The property's market value is £500,000 as we had Foxtons value it.0 -
Keep_pedalling wrote: »it sounds like your parents have very little in the way of any other assets, so they would be very foolish to give away their only asset. Downsizing or equity release would be a better option for them, and they certainly should not go ahead with this without taking independent financial advice.
If they don't give away their asset to me, then they will lose the house, which my dad refuses to do as we've lived there 30+ years. It would be impossible to purchase 2 separate properties for mum and dad to live in without them both moving far away from London. At the end of the day, their intention is for me and my brothers to inherit their property, so we're just accelerating that process, and with 1 year left on their mortgage, we need to be pretty quick.
They trust that I won't kick them out and make them homeless. For nearly 20 years I've financially supported my parents almost entirely (mortgage+bills etc.) with the help of my brothers too. Makes more sense for me (and my brothers) to own the property and use it as revenue to finance them. My parents (in particular my dad) are not good with money, the whole mess with the mortgage being interest only and not having it paid off already is because my dad remortgage the house 20 years ago to do a business that didn't end well. Their assets are in safer hands if we own it.
I'm not too sure about equity release. I think my current route will be more economical in the long run, but I'll look into it.0 -
Have you considered what might happen if either of your parents have care needs? There is no limit to the number of years the local authority may go back in terms of deprivation of assets, so they may be treated as still having the funds themselves. Are you able to cover any costs, either care at home or residential?0
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Get a new broker this one saw you coming.
Are they going to stay living in it or not?0 -
getmore4less wrote: »Get a new broker this one saw you coming.
My accountant (my uncle) recommended him to me. Although I'm beginning to learn that when friends/relatives offer to do a favour, it's usually you that are doing them a favour. How much should I expect to pay for all this?getmore4less wrote: »Are they going to stay living in it or not?
Nope.0 -
If you're going to be renting the property out to someone else, and effectively because you are inheriting the property, it sounds to me like a consumer buy to let, which will probably reduce the amount of lenders available to you. Or if you allowed your parents to continue living there, and if they paid you rent, it would be a regulated buy to let.0
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Have you considered what might happen if either of your parents have care needs? There is no limit to the number of years the local authority may go back in terms of deprivation of assets, so they may be treated as still having the funds themselves. Are you able to cover any costs, either care at home or residential?
Yes, I should be able to cover the costs. I have a good and steady job, and I'll have income from their property to top it off. Further if the costs were astronomical, then I could always sell the house in the future with even more equity accumulated. I know these are good questions to ask, but my main concern is how I can get the property transferred to me with a good deal on the transaction and mortgage. Everyone involved is in support of this. I will always support my parents.0 -
If you're going to be renting the property out to someone else, and effectively because you are inheriting the property, it sounds to me like a consumer buy to let, which will probably reduce the amount of lenders available to you. Or if you allowed your parents to continue living there, and if they paid you rent, it would be a regulated buy to let.
I'll have to google this term. I'm guessing this is why they came back with vida homeloans rather than one of the more well known lenders like Halifax, RBS etc.?0
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