Owner Financing - House

[AllGoodDogs]

We privately rent, and love our house and don't want to move, but our situation means we cannot (now or in the foreseeable future) get a mortgage to buy it. Does anyone know anything about approaching our landlords to finance our purchase. Essentially we would own the house and make the mortgage payments to them as opposed to a bank, and wouldn't need a deposit. Obviously we would have solicitors and do it by the book, agree a fair price, repayments and what would happen if we wanted to sell before it's paid off. They know we can afford the rent (been here 7 years and never been late on rent), and we have made improvenents to the property. There are things that need doing to the house that the LL are reluctant to pay for, so if they agreed to this they'd have no more to pay out for the house, but still have a guaranteed income from it. The house was left to my LL after family died so it was never an investment, they don't rent out any other properties.

I'm sorry but this is never going to happen. You don't even know if they could afford to loan you that amount. No LL would ever consider this.

What’s in it for the LL?

You seem to be assuming that they’ll agree to a slightly iffy plan, just because you want them to.

It seems to me that the LL would only be getting in 'mortgage' the same as he/she gets in rent and it would take several years for you to pay this off. Any property left to a person is that person's 'investment' whether they gain by selling or renting the property out. Which ever family member left it to them intended it to benefit their family member not you. If I had that property left to me and wanted to sell it I could get it's whole value at once rather than over several years. They can have that in rent and still have ownership of the property. I can see how this would advantage you ...no need to leave a property you love in order to buy and perhaps advantages interest terms and a shorter mortgage period ...but I can't see how it would be any real advantage to the current owners.

Why would any landlord want to do this when they can continue renting it and benefit from the property increasing in value. Sorry but I would be pissed off if one of our tenants asked us to do this.

Unless ll is a ha or similar it is not that simple. Any loan arrangement would need to comply with regulations and you would essentially be renting to buy on shared ownership. Your reoayments woukd need to cover rent plus some.

Any landlord would be mental to agree to this. They're not a bank. What's in it for them other than missing out on any future value increase by the time you've paid it off. I think you need to concentrate on rectifying the reason you can't get a mortgage.

I was thinking it would be guaranteed income and no hassle in terms of the work needed on an aging property as that would become our responsibility. It was just a pipe dream I guess. Thanks for the responses 😊

It's as guaranteed an income for them now! Basically it's not guaranteed cos you can default at any time! Just like now with rent.

So why would they not have the benefit of owning too .

Yep. I get it 👍

Move to cheaper location

Rent a cheaper property

Buy with other people

Alternative accommodation /living styles

Work more than one job/overtime

Nice idea, but definitely not going to happen

Look into help to buy or shared ownership schemes perhaps

Never going to happen. I’ve never even heard of that. In simple terms, at the moment, they own the house and let’s say get £600 in rent. If they agree to your proposal, they’ll only be getting the same £600 (‘mortgage’) but will no longer own the house. So what’s in it for them? If they sell in the open market, they’ll get the full value and can buy another house, etc

The only place that I know of to obtain a mortgage is from a bank

Your landlord is not a bank

It's not as unrealistic as some of the responses above make out.

But it will be a lot more expensive than you think and it is most certainly unrealistic to think they would transfer ownership to you just like that. The reason you can't get a mortgage is because a dispassionate assessment of your circumstances are such that financial experts do not think you can reliably make monthly payments for the next 20+ years throughout whatever economic turmoil may develop. If a bank won't take a risk by adding to to their books of thousands of customers, a smalltime landlord would be risking far too much to have your financial stability tied so strongly to theirs.

The maths would work as something like:

Normal rent £1000 pcm. House value £240,000. Instead of that rent you start paying £1650pcm and after 1 year you own 3.25% of the house. Completely ignoring inflation on house price and rental values, you continue to pay £1650pcm and each successive year a marginal slice less of that sum is rent, and a marginal slice more is purchase cost. Continue at that rate and after 8 years you would have paid for just over 25% of the house - you couldn't expect them to put you on the deeds any sooner than that but it would be reasonable to have the fact of your joint ownership be officially noted at the 25%, 50% and 75% milestones. You would own the place after 20 years.

But not many would go for such a deal. The risks of what might happen if you stop being able to pay are too great.