Mortgage help

pareshkeshra · 7 September 2017 at 7:08PM

Hi everyone,

Just wanted some advice. Here's my situation;
I'm currently working full-time earning 25k a year with around 6k in overtime

My mum who is 60 year old owns a property which is mortgage free, the mortgage was paid years ago so she owns the property 100%.
She is currently working Part-Time earning 11k a year

Here's what I thought we could do:
Put my name on the house deeds (might not even need to do this if the mortgage is just being calculated by mine and my mums income) and apply for a residential mortgage which would be
25k x 4 = 100,000k
11k x 4 = 44,000k
Total we'd get would be around 145,000k

Then use 100,000k of that money as a deposit to purchase a new house which were planning to live at.
The house we have seen is 380,000k
so we would require another 280,000k

what’s the best way to get this? As I was thinking I could place the property my mum owns on rent which would get a rental income of around £1700 per month, Use this rental income to pay off both mortgages and if there’s any shortage then I chip in with few hundred pounds every month.

So essentially we'll have two mortgages one residential and one buy to let.
Am I on the correct line please I'm so confused which way to go.

Thanks in advance.

glosoli · 7 September 2017 at 7:26PM

The issue with multiples is they don't reflect how borrowing power can reduce the older the applicant gets. A few things stand out:

1) Assuming neither of you have been landlords before, then raising funds against your mother's current home will be a consumer buy to let application, which may narrow down the choice of lenders. These are somewhat different than regular buy to let applications.

2) It may prove difficult to get a lender to take rental income into consideration for a property which is not being rented out yet.

3) The rental income you receive from the buy to let will not be all profit, and there will be costs associated with the buy to let, i.e the mortgage repayment itself, and not all lenders will take 100% of rental income into consideration, so it may not boost your borrowing power as much as you may think.

4) Similarly, mortgage lending is generally capped at five times an applicants income. Do not assume that rental income will form part of this multiple. £280,000 is 8.2x your combined gross annual income, with the overall mortgage borrowing being 11.17x , therefore it is a big ask to be honest.

5) If your mother is currently 60 years old, and the mortgage stretches beyond when she anticipates to retire, then she may have to demonstrate she will be able to afford the mortgage in retirement. This is a minefield in itself in terms of evidencing affordability in retirement.

NinaSwiss · 7 September 2017 at 8:23PM

Dont forget you will also need another £20,400 to cover stamp duty on a second property (at £380,000). You will need to add this to your calculations.

pareshkeshra · 7 September 2017 at 8:46PM

Yes another £20,400 for stamp duty. Plus fees and ect. Almost forgot about that... I think my ideas looking like a long shot.

Mortgage help

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