mortgages ?

David _b

David _b

David _b

Associate
Joined
28 Mar 2004
Posts
2,430
Location
N Ireland
So

I dont post here much, did years ago though. But thought would pop along.

Anyone own a house and let it out ? I have a chance to buy a house, off my dad, i am a first time buyer. he is also happy to let me pay him back outside the mortgage as well, say 15k over the next lot of years, so i will be lending 15k less than i need and avoid the interest on that.

I know nothing about mortgages. Whats the craic with the repayment mortgage and the interest only mortgages, whats the general one to go for ? And, i dont actually need to move out, i could carry on living with the parents and let this house, that idea appeals, so i am told i would need a buy to let mortgage.

Then on the letting side, i am told there is a lot of things to do with declaring income, how much i can avoid paying etc.

Just after a general feeling here, i do know it will be hard to get a buy to let mortgage being a first time buyer, was told way around it is to buy it with a normal mortgage then only tie in for one year, when i renew i am then a homeowner and will be able to get a BTL mortgage a lot easier.
 
BTL mortgage needs bigger deposit generally. Interest only mortgage is treading water; you are only paying off interest.

Go and speak to a Financial Advisor. They are free (generally) and will give you much better advice than anyone on here. Unless the person giving you advice on here is an IFA.
 
I have a few things in response but the main one it will be nigh on impossible to get a BTL mortgage as a FTB when you are buying off your Dad at a discount.
 
PapaLazaru said:
I have a few things in response but the main one it will be nigh on impossible to get a BTL mortgage as a FTB when you are buying off your Dad at a discount.
Click to expand...

I spoke to 2 mortgage advisors. The first one basically said he will do me a normal mortgage and what i do with it is up to me. The second one was very down the line, told me i need BTL and she done a search, one lender was all she could get on her mortgage app, also had some strange conditions, one being i needed to earn 25k per year. It was her suggested i get a normal mortgage for a year, bum about, live in the house/decorate/whatever, then a year later come see her and she will renew with a BTL as then i will be in a better position, as a home owner.
 
for info, the house is valued at 60k, so not some mansion. The intention was get him 45k from mortgage, then 15k over the next while. I assumed that this would also put me in a better position, as basically i am lending much less than the house value
 
There are a lot of issues, the main one is the discounted price. No lender would want to do that as they know that your Dad has an interest in the property. There is just no way of getting round that.

You can buy it off your Dad, but only at the market value, though you might be able to shave a few grand off it.

Why not just buy it, live in it and do it up properly and sell it in a few years? The housing market is in a very positive state at the moment and you will be quids in, in a few years anyway.

Is there any reason you don't want to get on the property ladder as if it is only £60k, all you need to be earning is £15k p/a and get a deposit of £6k together to get a mortgage on it.
 
They dont need to know my dad has a interest, all they know is he decided to give me the house for 45k cause he is nice like that. And that the house is valued at 60k.

I have the deposit covered easily, have near 20k in the bank and earn a good wage too so can cover payments easily.

I just am perfectly happy at home still, hence the curious bit of buying it and letting it. Simply because i know its a good deal to pass up, weather i need the house or not
 
Also, another point. Related sort of, i have a gf. If she stays with me a few nights here and there, or even moves in with me, is there any situation that could arrise,,, should the relationship go breasts north, that she could have a "claim" on the house ?
 
David _b said:
They dont need to know my dad has a interest, all they know is he decided to give me the house for 45k cause he is nice like that. And that the house is valued at 60k.

I have the deposit covered easily, have near 20k in the bank and earn a good wage too so can cover payments easily.

I just am perfectly happy at home still, hence the curious bit of buying it and letting it. Simply because i know its a good deal to pass up, weather i need the house or not
Click to expand...

They will know that he has an interest in it as he has let you have it for £45k. You simply cannot get round this issue. You can tell a lender what it is a gift all you like but like I said, you will be hard pressed to find someone to lend on it. I've seen these applications many a time and they have all been refused.

You could possibly buy it for market value, then get him to give you the £15k back though. Possibly.
 
Wont work sorry to say. :(

It is not upto your dad to value the house and except 15k less it is upto the lender am afraid. You need a BTL mortgage, so you looking in the region of 30-40% deposit.

Why not as said above just buy for yourself at market value? :confused:

As for interest only mortgages, whats the point if you never going to own it. Oh and you will also pay tax on your profit if you rent out.

For example (off the top of my head not real figures)

You borrow say 100K interest only and repayments are say £400 but your rental income is £800. Then you will pay tax in the £400 profit minus any costs such as maintance etc.

There are otherways round it but you dancing on the legal/illegal line. Thats what advisers do ;)
 
David _b said:
Strange, its a issue that both mortgage advisors had no issues with
Click to expand...

They are not lending the money though. They will try and sneak it through with a lender, but I expect the lender will see right through it.

See if they are worth their fee and go for it. No reason not to.
 
itchy said:
Wont work sorry to say. :(

It is not upto your dad to value the house and except 15k less it is upto the lender am afraid. You need a BTL mortgage, so you looking in the region of 30-40% deposit.

Why not as said above just buy for yourself at market value? :confused:

As for interest only mortgages, whats the point if you never going to own it. Oh and you will also pay tax on your profit if you rent out.

For example (off the top of my head not real figures)

You borrow say 100K interest only and repayments are say £400 but your rental income is £800. Then you will pay tax in the £400 profit minus any costs such as maintance etc.

There are otherways round it but you dancing on the legal/illegal line. Thats what advisers do ;)
Click to expand...


reason is to avoid lending as much and paying interest on that amount. Instead i will pay the dad only whats owed. Zero interest.

I must say, this is a surprise about not letting the dad say what he wants to sell the house for. Its his house, he could sell me it for a fiver if he wants
 
David _b said:
I must say, this is a surprise about not letting the dad say what he wants to sell the house for. Its his house, he could sell me it for a fiver if he wants
Click to expand...

He could, but you are not buying it with your own money though, you are borrowing the money off a lender, secured on the house!
 
Yep, agree

If anything though, i thought the lender would be more keen, as they are giving less than the house is worth. So there shelling out less money secured on something worth more, positive equity straight away
 
David _b said:
Yep, agree

If anything though, i thought the lender would be more keen, as they are giving less than the house is worth. So there shelling out less money secured on something worth more, positive equity straight away
Click to expand...

One would assume so, but to be fair, they are all lending loads at the moment and your deal is a drop in the ocean for any single one of them. That plus the fact that they are all heavily regulated and these kind of things are frowned upon.

Just buy it for market price and get him to give you the £15k back. ;)
 
Interest only, you'll only pay tax on the repayment and in 30 years when it's tripled in price the price your paying now will be insignificant.
 
David _b said:
Yep, agree

If anything though, i thought the lender would be more keen, as they are giving less than the house is worth. So there shelling out less money secured on something worth more, positive equity straight away
Click to expand...

I know what you are saying but it dont work like that, it should I agree.
Just not the way the banks work, it might work if you have a huge deposit but otherwise they want market value price not dads.

What the bank will see is that your dad is valueing lower, and taking the
extra 15k on the side. What happens of you dont pay dad? Plus they will know you are hocked up for another 15k on top of your mortgage.

They will see

House valued too low.
Borrower an extra 15k in debt.
Interest only.
Buy to let.
Low deposit.
Risk very high on default.

Dont get me wrong before 2008 this would be a walk in the park but now they
go through everything. Unless you go a little dodgey! ;)
 
You must log in or register to reply here.
Back
Top Bottom