Sev­eral op­tions open for buy­ing mother’s coun­cil home

Yorkshire Post - Property - - PROPERTY - Franz Muelthaler

I am look­ing to pur­chase my mother’s coun­cil bun­ga­low. This is for se­cu­rity for my younger sis­ter in case any­thing were to hap­pen to my par­ents and also as 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?

Be­cause you do not have any ex­ist­ing mort­gage com­mit­ments, you are ef­fec­tively a first­time buyer. In prac­tice, this gives you sev­eral op­tions to con­sider. Firstly, 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, should she be 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 sec­ond pos­si­bil­ity is a buyto-let mort­gage. You would need to ob­tain a rental as­sess­ment, and the prop­erty would be bought in your name. Us­ing this route, you would still be able to get a mort­gage on your own res­i­dence, should you wish, but your bor­row­ing for your mother’s prop­erty would be at a higher rate than a res­i­den­tial mort­gage.

Last year I pur­chased a twobed­room flat in Har­ro­gate un­der a shared-own­er­ship scheme. I have a re­pay­ment mort­gage and am con­sid­er­ing sav­ing for “stair­cas­ing” for the rest of the share I have avail­able on my flat. I have just sent my lender a cheque for £1,000 as an over­pay­ment for my cap­i­tal on my mort­gage. Do you think it is wise to try and re­duce the cap­i­tal loan I owe now or save to­wards stair­cas­ing?

My ad­vice here re­sults more than any­thing from the low rates of in­ter­est that are avail­able at the mo­ment, and the fact that it is still rel­a­tively cheaper for you to bor­row than for you to save your money in a bank or build­ing so­ci­ety. Given that, I’d sug­gest that you con­sider 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 cur­rent mar­ket to buy your home out­right at an early stage.

My par­ents (in their late six­ties) pur­chased their coun­cil home now worth £100,000 plus, in 1988 with a mort­gage of £9,000 and a home im­prove­ment loan of £3,000. Dad died re­cently and we dis­cov­ered that his en­dow­ment pol­icy had been cashed seven years ago, but alas he had not gone round to re­plac­ing it. The loans are due to be re­paid in 2012 and, al­though we can pay the £3,000 loan, could you point us in the right direc­tion for sort­ing out the short­fall of the main mort­gage?

Mort­gage bro­kers have be­come in­creas­ingly con­cerned over the num­ber of bor­row­ers who have can­celled en­dow­ments with­out ar­rang­ing al­ter­na­tive ways to re­pay the cap­i­tal on their mort­gages.

Hav­ing said that, I think you would be wise to con­tact your Dad’s len­ders and ex­plain the sit­u­a­tion. In the first in­stance, given the cir­cum­stances, they should agree to you con­vert­ing the mort­gage into a re­pay­ment, so that the cap­i­tal and in­ter­est are both re­paid at the end of the term.

How­ever, you may find this op­tion too costly in terms of monthly re­pay­ments.

As an al­ter­na­tive, the lender might al­low you to ex­tend the mort­gage term. If nei­ther of the above are vi­able, you should be able to re­mort­gage the prop­erty, al­though this would mean covert­ing the ti­tle to the house into your names, as I as­sume your mother would not have an in­come that would sus­tain the mort­gage.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.