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Property/DIY

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Original poster

Crackers idea or not...mortgage

9 replies

LanguidLobster · 13/03/2018 13:27

I've seen a property I really love and viewed it. I think potentially it would be fine to live in for 20 years, if that makes sense, nice location, pretty functional place.

A relative said they would put up 40% deposit. I earn 1/10th of the price as I work one day a week.

It would be a joint purchase until I could fully take it on so relative's money is protected. My bank says all ok.

Is this completely mad? I wondered if it was too much of a 'pipe dream' and I was building castles in the sky or whatever the term is!

I can't get back to work fulltime until a court case is over so although this looks positive, thought I may be self indulging by wanting to buy it or operating on planet cuckoo.

OP posts:

KitKat1985 · 13/03/2018 15:59

It really depends on your relationship with the person putting up the 40% deposit. What happens if you and they fall out? Or they hit financial issues and need their money back?

Personally I always feel slightly uncomfortable with being beholden to people financially but only you really know the circumstances and what you are comfortable with.

SecondaryConfusion · 13/03/2018 16:33

How much is the mortgage compared to the rent you’d pay otherwise? Even if longer term relative wants to pull out, you’ll have saved with cheaper mortgage (assuming rent is more) and have built up equity in the home that you can release to either but elsewhere or have as savings if you end up renting again.

Original poster

LanguidLobster · 13/03/2018 20:20

Well the idea was that it would be rented out for the first 2 years and relative receives the majority of the rent (1 bed, £600 per month, covers mortgage so no financial loss to them) and I would more fully take it on after that.

I really can't work full time until I have got a legal situation sorted out and am very nervous about sticking up for myself.

It's a lovely place, guess will see what happens this week as I'm waiting to back about the offer, thanks for advice :)

OP posts:

dancingqueen345 · 13/03/2018 21:40

I'd do it. It's similar to shared ownership except in this case the other party is a relative rather than a housing association.

Would they give you the option to step purchase? I.e if you can save whilst paying the mortgage, buy them out in a few chunks?

Original poster

LanguidLobster · 13/03/2018 22:15

kit they'd advantage financially, they have their own property and no huge expenses coming up. It was supposed to be a very short term measure until I'm firing on all cylindars again and all the awful legal stuff is out of the way.

dancingqueen step purchase, I've never heard of that, will look into it thanks. Back to bank!

OP posts:

delilahbucket · 13/03/2018 22:18

Please be aware that if this is a second property they are purchasing, they will have to pay additional stamp duty.

InTheRoseGarden · 15/03/2018 10:30

I would be wary of this. Lots to think about. How will you own the property? In your sole name or jointly with the family member? If in your sole name will they take a second charge over the property? In what circumstances will they be able to call for the loan to be repaid? It sounds like they view it as a short term thing. What if you're not ready to buy them out when they want out? If you're planning to borrow to buy them out, be aware you may not be able to borrow 100% of the value of the property. Do you have a lump sum to effectively replace the deposit? Their circumstances may change as well as yours. How about increases in value of the property, how will they be shared? What about decreases? If the value of the house falls it is basically the deposit that gets eaten up first (bank last). What's in it for the relative? Do they want to be paid interest? Lots more...

Original poster

LanguidLobster · 15/03/2018 19:55

RoseGarden funnily enough the estate agents phoned earlier so I came back in here - loads to think about must go through figs with a fine toothcomb next week.

More research required, thanks!

OP posts:

JoJoSM2 · 16/03/2018 22:34

As I understand, you're planning to rent it out? So a rental flat that you'd take over to live in after 2 years? What if there's a bad tenant who doesn't pay? Have you inquired about buy to let mortgages? Who'll be responsible for repairs? E.g. boiler packing in? What about taxes? They can be high on btl's.

I don't the idea makes a lot of sense. There's a lot that could go wrong and it doesn't really help your situation. You could buy your own place when you can afford it.

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