How do I go about buy­ing my mother’s coun­cil house in my name?

Yorkshire Post - Property - - PROPERTY - Brian Newton

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.

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