Question for resident property experts!
Discussion
As this place seems to pretty much manage to be the fountain of all knowledge, I thought it was as good a place as any to ask a couple of questions.
Me and my brother are looking at the possibility of buying a house in London. Basically I'm a veterinary student, and he's doing other stuff at the moment. It seems as though if we buy a 3 bedroom place (seem to be available around sub £300,000 mark in Camden) and rent out the extra room, an interest only mortgage would be about the same if not cheaper than rent. Our parents don't have a mortgage on their house any more (it's worth about £500,000 we think), and are willing to be guarantors.
Will anyone give us a mortgage for pretty much all of the value of the house? Would it be better to convince my parents to remortgage their house?
The other point is about tax stuff if my parents officially own it. Is there any way of getting around that, bearing in mind that it's not really them paying for it, it just might have to be in their name to be able to get hold of the mortgage?
At the moment we're just trying to work out if it's a stupid idea or not, which it probably will be. If any of you could give any suggestions, or tell my it's stupid and not worth pursuing, that'd be fantastic.
Thanks very much
Sam
Me and my brother are looking at the possibility of buying a house in London. Basically I'm a veterinary student, and he's doing other stuff at the moment. It seems as though if we buy a 3 bedroom place (seem to be available around sub £300,000 mark in Camden) and rent out the extra room, an interest only mortgage would be about the same if not cheaper than rent. Our parents don't have a mortgage on their house any more (it's worth about £500,000 we think), and are willing to be guarantors.
Will anyone give us a mortgage for pretty much all of the value of the house? Would it be better to convince my parents to remortgage their house?
The other point is about tax stuff if my parents officially own it. Is there any way of getting around that, bearing in mind that it's not really them paying for it, it just might have to be in their name to be able to get hold of the mortgage?
At the moment we're just trying to work out if it's a stupid idea or not, which it probably will be. If any of you could give any suggestions, or tell my it's stupid and not worth pursuing, that'd be fantastic.
Thanks very much
Sam
If the property legally belongs to your parents, then the rents accruing on the property are their rents. Therefore, THEY would be liable to return the rental income on their tax returns and pay the resulting income tax. Also, if the property was sold, they would be liable to any Capital Gains Tax arising on the sale.
If your parents are actually taking out the loan for the property, they are not just being guarantors. They are the actual borrowers. Who is going to be making the loan repayments, your parents?
If your parents are actually taking out the loan for the property, they are not just being guarantors. They are the actual borrowers. Who is going to be making the loan repayments, your parents?
eric mc said:
If your parents are actually taking out the loan for the property, they are not just being guarantors. They are the actual borrowers. Who is going to be making the loan repayments, your parents?
Well, ideally the loan would be in mine or my brother's name (or both). We would be making the loan repayments (which would work out at slightly less than rent for someone else). It's just whether we could get someone to loan us enough.
With appropriate guarrantors, I'm sure you could get a 100% loan. Trouble is, I expect it would be expensive.
Would also be expensive for your folks to remortgage at this time of their lives, as the life assurance for an interest-only mortgage would be very high for them (would be a lot less for you young 'uns).
Perhaps the easiest thing to do would be to take out a personal loan (from the bank or willing parents?) to cover a deposit and just get a regular mortgage.
The only problem might be (as you are a student and its not clear if your brother is in full-time employment) persuading anyone to give you a mortgage. As you're studying to be a vet, I don't know whether you might be able to play the "I'm going to be loaded once I qualify" card...
Would also be expensive for your folks to remortgage at this time of their lives, as the life assurance for an interest-only mortgage would be very high for them (would be a lot less for you young 'uns).
Perhaps the easiest thing to do would be to take out a personal loan (from the bank or willing parents?) to cover a deposit and just get a regular mortgage.
The only problem might be (as you are a student and its not clear if your brother is in full-time employment) persuading anyone to give you a mortgage. As you're studying to be a vet, I don't know whether you might be able to play the "I'm going to be loaded once I qualify" card...
If you put down 25% of the value of the house you wish to buy then it would be no problem to buy the house and you would easily find a company to lend you the money although from reading the posting it suggests that you need 100% loan to value.
I believe it would be difficult to achieve 100%
I believe it would be difficult to achieve 100%
I bought my first place 16 months ago and required 100% LTV mortgage. Despite being on a good wage (but cr@p at saving 
) there were basically 2 loan offers available to me (Northern Rock and one other). Either the other lenders wouldn't do a 100% mortgage or the interest rates they charged made it prohibitive.
Check out Northern Rock - If they won't do it you'll probably have to reconsider your options (or pay a fortune in interest!)
) there were basically 2 loan offers available to me (Northern Rock and one other). Either the other lenders wouldn't do a 100% mortgage or the interest rates they charged made it prohibitive. Check out Northern Rock - If they won't do it you'll probably have to reconsider your options (or pay a fortune in interest!)
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