How do I go about buying my mother’s council house in my name?
Q: I am looking to purchase my mother’s council bungalow. This is for security for my younger sister in case anything was to happen to my parents and also an investment for myself. The problem is that I do not live at that address, I live with my partner.
However, we do not have a joint mortgage, as he had the property before we met, so my mother’s bungalow would be my only mortgage. Is there anyone that may be able to help? A: Because you do not have any existing mortgage commitments, you are effectively a first-time buyer. In practice, this gives you three options to consider.
Firstly, if you do not need to borrow in excess of 75 per cent of the property value, certain lenders have in place a “dependent family scheme”. This allows you to borrow in your name to fund the purchase of the property, even though you will not be living at the property. However, the potential disadvantage is that your borrowing on this property will be taken into account, should you wish to take out another mortgage.
Alternatively, you could act as a guarantor for your mother’s mortgage. This means that she would buy the property in her own name, but that you would be responsible for the mortgage repayments, if she is then unable to continue with them. The potential disadvantage with this is that you would not have any control over the property. However, please remember that, if your mother buys the property in her own name, she may qualify for some discount off the purchase price from the local authority.
The final possibility is a buy-tolet mortgage. Using this route, you would still be able to get a mortgage on your own residence, should you wish, but your borrowing would be at a slightly higher rate than a residential mortgage.
At present, most buy-to-let lenders are offering a maximum loan to valuation percentage of 70 per cent to 75 per cent, although The Mortgage Works is now offering 80 per cent on its core product range. Q: I own a small flat under a shared-ownership scheme, on which I have a repayment mortgage with the Abbey, now Santander. At the moment, I am considering saving for “staircasing” the rest of the share I have available on my flat, and have just sent my lender a cheque for £1,000 as an overpayment for my capital on my mortgage. Do you think it’s wise to try to reduce the capital loan I owe now or save towards staircasing? A: Given that most analysts estimate that rates will remain the same during the foreseeable future, it is still relatively cheaper for you to borrow than for you to save your money in a bank or building society.
As such, I’d suggest that you consider remortgaging, or alternatively asking your lender if they would be willing to advance you the additional amount that you need to purchase the remainder of the property. That way, you’d be able to take advantage of the present market to buy your home at the earliest opportunity. Q: My parents (in their late sixties) purchased their council home (now worth £80,000-plus), in 1988 with a mortgage of £9,000 and a home improvement loan of £3,000.
My father died this month and in searching his papers we discovered his endowment policy had been cashed seven years ago, but alas, due to illness he had not got round to replacing it. In 2011, these two secured loans are due to be paid. We can pay the £3,000 loan, but could you point us in the right direction in sorting out the shortfall of the main mortgage? A: Mortgage brokers are becoming increasingly concerned over the number of borrowers who have cancelled endowments without arranging alternative ways to repay the capital on their mortgages. You would be wise to contact your father’s lenders and explain the situation. Given the circumstances, they should agree to you converting the mortgage into a repayment, so the capital and interest are repaid at the end of the term. However, it might be too costly in terms of monthly repayments, so the lender might allow you to extend the mortgage term.
If neither of these are viable options, you should be able to remortgage the property, although this would entail converting the title to the house into your name. Q: I am a single mother working 25 hours per week with a salary of £13,800. At present, I am a joint mortgage holder with my ex-partner in a property valued at £195,000, with a £60,000 mortgage. My ex-partner wants either to sell the property or for me to get my own mortgage.
He has agreed I can use his share of the equity, but I have tried various lenders without any luck. I also receive a maintenance payment of £350 per month, but this is not a legally-made arrangement. Where can I go from here? A: This is a classic situation where you are fortunate enough to have built up substantial equity in your property.
You should speak to a mortgage broker and calculate your income – including your maintenance if you wish. This will give you a figure you can afford to borrow which, combined with the equity, should guarantee you have sufficient funds. Be sure you can afford the repayments when interest rates rise again.
Brian Newton runs Bluesky Financial Solutions. Tel: 0113 294 6222.