Anyone an expert in mortgages or property?

[mr cgull]

I was just wondering if anyone would be able to give me some advice please?

I am 30 and rent a property in with 2 other people, paying £370 + bills per month through a letting agent.

We are due to go our separate ways in June, but the landlord has contacted me and offered me the opportunity to buy half of the house, to live there and to rent it out to new people and share the costs.

He has an interest only mortgage and presently pays £980 per month. The house I would estimate is approximately £250-300k - way out of my ability to buy in full as a first time buyer.

My original plan was to rent for another year and look at buying on my own in 1 year's time but as a single person my options are limited. This offer has intruiged me.

Obviously I need to be sure I can trust the landlord, so let's say I was able to say that:

I just wondered if it sounded a good idea in principle or should I avoid it?

Cheers

P.S. I foolishly posted on a property site today and got no comment or opinions - have a feeling that won't be the case on NSC!!

 

[Uncle Spielberg]

Without knowing your income its difficult to advise. I would say you need to do a buy to let mortgage whereby you can get up to 85% of the property value as a mortgage depnding on the rental income the property can get. Does the landlord have a mortgage as its not possible to have 2 mortgages on the 1 property. Also you would still be subject to stamp duty.

 

[seagullsovergrimsby]

There are lots of things to consider. Buying half of the house means that you become a landlord. If the house has a market value of £250k you would then need a £125k mortgage. Most mortgage companies/banks are tightening up on who they lend to and to reduce their risk will ask for a deposit. What happens for instance if the original owner defaults on his repayments. What happens when you want to sell. I would personally seek professional advice rather than wait for comments on NSC

 

[mr cgull]

Thanks both of you. I will be seeking professional advice if I'm intereste, but as a complete novice to mortgages/house ownership etc I've just been gauging opinion from people who potentially know more than me, before seriously considering it.

The landlord does have a mortgage US, he said it was a Intrest Only mortage.

 

[seagullsovergrimsby]

Without knowing your income its difficult to advise. I would say you need to do a buy to let mortgage whereby you can get up to 85% of the property value as a mortgage depnding on the rental income the property can get. Does the landlord have a mortgage as its not possible to have 2 mortgages on the 1 property. Also you would still be subject to stamp duty.

Couldn't they be joint mortgagees ? A BTL re-mortgage providing they have a 15% deposit ?

 

[mr cgull]

Just spoken to him, seems it is more complicated than he'd imagined or wanted so it may be a no-go.

Thanks though.

 

[Gully]

There are a lot of alarm bells ringing here, the current mortgagee for the property has it on interest only, hence he will have to pay off the amount loaned to own the property at the end of the mortgage unless he changes to repayment.

How about as an alternative you and the other two buy the property from him, on a shared ownership scheme, all done legit and above board...at the moment it is the time to be a buyer, perhaps he knows this and is trying to share the pain of owning a house that he can't afford, you might be able to get it for a real snip.

 

[mr cgull]

Thanks for the suggestion Gully, but 2 problems:

1. I don't think he wants to sell the whole property.

2. One flatmate is buying her own place and the other couldn't afford it!

 

[Midikilledmydog]

This is fraught with problems at every turn, the legal advice to resolve them all will not be cheap, some of the potential pitfalls may not even have satisfactory solutions. In a falling market with mtgs expensive why bother with it, in your position I would sit tight, try and get a deposit together ( I admit difficult when you have rent to pay) and buy when the market is on the turn.

 

[Herr Tubthumper]

If you can get a deposit together you will be better off buying a whole house and renting out the other half yourself. Spilt the mortgage down the middle, you pay half and the tennant pays the other via their rent. You also get 4k a year tax free via the rent-a-room scheme. Come the future you will own the whole house and not half like you will with this proposal.

 

[Uncle Spielberg]

The only way is to be joint mortgagee's , you would re mortgage on a joint mortgage basis with the 50% extra raised going to him. Most buy to let mortgages are done interest only so thats not a suprise. The mortgage deeds would need to be in joint names. This is a time when buy to let mortgage products are very rare, rental income yields are high, loan to values are low and the property market is very uncertain.