Buying girlfriends parent's house under value

Gaverick

Gaverick

Gaverick

Associate
Joined
21 Jan 2006
Posts
2,171
Location
Seaham, Co. Durham
Hi All,

I'm wondering if you could offer some advice as I feel a bit out of my depth in this situation being only 25 and having never bought a house before.

I have been living with my girlfriend for 5 years with her mother, in her mothers house. We have recently found out that her mother has ~£55,000 on an interest only mortgage and only 8 years to pay it off. The mother has recently lost her job has no means of having the 55k at the end of the 8 years.

We have came to a mutual agreement that my girlfriend and I will take out a mortgage for the 55k and buy the house from her (house is worth 75k on a conservative estimate). We will live in the house for 5-10 years and then use the equity to buy ourselves a bigger house.

How do I proceed from here? We have a final settlement figure from the mortgage company but I have no idea where to go next. Do I need a solicitor and does the mother need her own solicitor? How much is a solicitor likely to charge us both if we do need one? If we don't need a solicitor how does everything work with regards to money transfer, etc.

We have the deposit ready and waiting.

Thanks in advance.
 
There are a number of legal documents that need to be completed. Mortgage lenders often ask for a conveyancing professional to carry out the process, you will have to pay for a mortgage survey on the property also & for one reason or another they could refuse you
 
If it's interest only - surely there's no asset value? Thus there is no actual payment for the capital value? Ie all you have is paid off the interest of the mortgage, you still have the capital cost of the actual house.
 
NickK said:
If it's interest only - surely there's no asset value? Thus there is no actual payment for the capital value? Ie all you have is paid off the interest of the mortgage, you still have the capital cost of the actual house.
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I'm not quite following but this is how I understand it at the moment.

- The existing mortgage which the mother has needs 55k to pay it off.

- Me and the GF plan to apply for a mortgage for 55k.

- The 55k will go to the mothers mortgage company to pay off the mortgage.

- Me and the GF will begin repayments on our 55k mortgage.

Do I need to start by approaching a mortgage broker to get an 'offer'?
 
Who do I see for advice, a mortgage broker? Literally have no clue at all with the whole process and everything I read seems to complicate matters further.
 
Gaverick said:
Who do I see for advice, a mortgage broker? Literally have no clue at all with the whole process and everything I read seems to complicate matters further.
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Go and see an independent broker but like Macca and I said, you may find it very difficult for the reasons I stated. I've worked for plenty of lenders in the past.
 
What are the factors that would make the mortgage company reluctant to lend to me in this case? We can easily afford the repayments and they are still getting a good chunk of interest from me for very little risk to them.

After even more reading I think I may need to see a conveyancing solicitor? I've found one local that offers a free first advice which they describe as a chance to explain my situation and they can tell me if they can help and ask about fees.
 
What are you doing with the mother when you buy a bigger house? Do you want to live with her for the rest of her life? You going to kick her out to fend for herself after getting a cheap house.
The legal aspect seems like the easy bit the arguments and grief could be massive.
 
I've bought off my Father in law.

paid full market value £140k
Mortgage 125
Mother in law kept 30K/ 19.8% in the property as an investment we got the difference to make some improvements. When we sold we owed her 19.8% of the sale price.
Or £30k if the higher figure
Or she could have thrown the contract away and forgot about the £30k

The last option would work well for you

All done with a lawyer.
 
I think I'll phone a mortgage broker (London & Country seem highly recommended) and speak to a local conveyancing solicitor to see if that can give some sort of structure to proceedings.

It's so frustrating as it seems such a simple idea in my head, but the reality it is unbelievably complicated!
 
Glaucus said:
What are you doing with the mother when you buy a bigger house? Do you want to live with her for the rest of her life? You going to kick her out to fend for herself after getting a cheap house.
The legal aspect seems like the easy bit the arguments and grief could be massive.
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She is going to put her name on the Gentoo rented housing scheme (long waiting list but we intend to stay for 5-10 years, we all have no issue with this as we've lived together for 5 already and get on very well, I'd consider her a 2nd mother. We are more than happy to accommodate her rent free for at 10 years but she understands she will have to move eventually. Plan B is she inherits parents house by the time we are ready to move).

The family side for us is easy, I just can't get a grasp of the legal yet.
 
all things have to be taken into account, what if you split from your girlfriend & who would pay then pay mortgage & continue to live in the house etc. ?
 
You each need your own independent legal advice. There are a number of pitfalls with what you're suggesting and there are also potential tax issues in addition to the lending issues.
 
If we split I'd imagine the house is sold and money used to pay off mortgage, and then all 3 of us have to find somewhere to live? We've all discussed the what if's together and we're comfortable with the situation and know what commitment we are making to each other.
 
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