House buying - mortgage question

[Sparks!]

Just a quick question hopefully someone here has a bit more insight, I'm a bit unwilling to ask a mortgage advisor just now as I don't want to waste their time.

Basically, and as example only, looking at a house at £125k (yeah needs work!)

10% mortgages are available so thats £13k say for a deposit + £1000 legal fees so £14k total (again as example)

Say I have half that deposit at 7k.

If I borrowed £7000 from a family member then got a mortgage for £132k and re-paid the £7000 straight off...

Is this all above board and generally okay provided the trust is there? Only person likely to lend me the money is my mum and it would mean re-mortgaging her house (which she has already talked about doing for a different venture) it would free up some money she wants to decorate her house too.

Anyone done this or similar and hit any problems?

Like I say, not sure she'll agree to it, I am very much trustworthy and I get paid twice as much as she does in a very stable job so I'm not a massively high risk I don't think!

I'm looking at a house in need of some work (i.e re-wire, heating/boiler and decorating/modernising), I'm not bothered about timescales or moving in as such as I can still live at home so I don't need to leave money aside for doing it up if it comes to it as long as the mortgage repayments aren't excessively high I should be able to afford to do it up myself as I go along.
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[Feasty]

So basically you're asking a bank to lend you more than the house is worth, I don't think they'll do that I'm afraid...
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[Sparks!]

[panrider_uk]

Borrowing £132k for a house worth £125k is a more than 100% mortgage and you'll be lucky to find one these days.

If by 10% mortgage you mean 10% deposit (i.e. 90% mortgage) then you'd be borrowing £112,500.

Mark
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[Sparks!]

[t121anf]

if the house is worth £125k, thats 100% simple as that, doesn't matter what your plans are.

so if the max a bank is willing to lend is 90% which is £112.5

you need to find £12.5k how you raise the £12.5k is up to you, one trick is to get a mortgage offer and then get a bank loan.

to get your deposit down to £5.5k effectively you need to get a cheaper house or somehow make the bank think the house is worth more than £125k, not easy, or find a deal that is larger than 90%

in short you can't do what you suggest in this day and age

[Feasty]

[t121anf]

not in the current climate you can't, both my mortgages, current and previous were up to 133% ones but you simply can't get them any more.

i'll let you guess who they are with, it started the banking crisis though

[Bendy]

[Kwaks]

Don't do it, as said what you are looking for is a mortgage over 100 %.

Not worth the stress
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[instigator]

Are you buying with a partner?

If not, what are you looking to get? 3 x salary?

[Sparks!]

[Phoenix]

I can't see it working out for you that, afaik 100% mortgages are not even available anymore, though no doubt there is 1 or 2 lenders offering them, but these days you will be paying a huge whack to get that mortgage, high setup fees and probably long tie ins etc as it's extremely risky for the lender, they have to hope that house prices won't dip at all from now on or you're instantly in negative equity.

House prices aren't rising particularly so why not wait until you can stump up at least the entire deposit yourself, also if you buy the house using this scheme then have no money to make it habitble you're going to be paying a mortgage on it and after the first year council tax which could be a lot, makes more sense to wait, if you're in a great job then if you can handle money you should be able to get 7k together fairly quickly.

[Sparks!]

[Phoenix]

I think maybe the confusion is because of the way it's being worded. You say you want to put down a 14k deposit roughly and get a 132k mortgage. What I think you were trying to say is you want to put down 14K and get 118k mortgage?


This totals 132K which is more than the house is worth but that doesn't matter because the mortgage is still under 125K so it's not 100%, it is 95% though so good luck with that.

[Sparks!]

[iooi]

[Sparks!]

[bladesman]

Im a mortgage adviser for a high street bank. Hopefully I can try and help you out with this a little

What you have to consider is that first of all is that most high street banks have moved from a wage multiplier of 3x or 4x earnings to affordability. I would look back at your past bank statements and wage slips to firstly see how much NDI (net disposable income) you have left each month. Currently we would not lend more than 60% of your net monthly wage for mortgage borrowing. But that also has to tie in with whether you can actually afford it in the first place.

Now there isn't any point me posting what if and how much can you lend me because it changes on a case by case/bank by bank basis. But by rule of thumb. Most banks now are lending 90% LTV or less. Now I know some are lending 95% LTV but if you want my honest opinion I wouldn't touch them with a barge pole. The problem at the moment is houses are going down in price - not necessarily by how much people are prepared to pay for them but how much they are coming back with on the valuation. This in time could leave you which negative equity. In simple terms. Owing more than the house is worth. At least with a sizeable deposit if for whatever reason you had to sell your house you wouldn't be in a financial pickle.

We expect customers to provide an upfront non refundable booking fee. Usually anywhere between £250 and £2500 but there are some which are fee free but there is a trade off with the actual rate you will get. Also the more deposit you have the better the rate you can qualify for. Likewise: (100k house) 80% LTV (20k deposit) 75% LTV (25k deposit) and 60% LTV (40K deposit)

Also any other fee's such as valuation fee's (if not included in the booking fee) and survey's and solicitors fees etc are considered compulsory extras. Budget anywhere between £500 and £2000 depending on location and property.

Hope that helps. Regards Rick

[Robby]

Looks like you need a bigger deposit or a cheaper house. Does it have to be a house for you, or are you also considering a flat?

www.propertyfinder.com

www.mustbesold.com

Property finder is where I found my flat. Must be sold is the site that were about to put it on auction, hence me getting it with a silly offer.

I wouldn't recommend taking out a loan to pay part of the deposit on a place that needs work. The work will always cost more than you think, and you'll need money to cover this. You'll also be paying a mortgage and bills, meaning the disposable income you have now will disappear.

Find something cheaper. You'll be able to get something at auction for well under £100k. You can fit a new bathroom and kitchen for under £3k, and spend another £1k on general decorating and tidying up, plus another £1k for contingency (you'll spend it).

[Sparks!]

Robby, I am sometimes tempted by a flat but only a converted house type, I can't be doing with "block" flats, tiny places or anything similar.. I'd be tempted by a house converted into 2 two bed flats but that's about it.

Problem is, in Portsmouth a half decent flat seems to be the same price as a house in need of work and I know what I'd rather do (house)... but even so, its still the same sort of price so still same deposit money needed. My sister bought a 2 bed flat a couple years ago, cost her £140k and its in a small block theyve had maintenance costs of almost a grand when no maintenace is carried out, and the flat below them is now a brothel and this is supposedly a "nice" area/flats!

I've kind of gone back to just saving and trying not to think about it too much until I have more money.. it's hard though as I really want my own place now!
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[Robby]

Buying flats the thing to do is find an ex council one in shit state, but in a nice block on a nice estate. They exist, I got lucky with mine. Council flats are a decent size and tend to be relatively up to date in major building works terms - double glazing can be expected.

You'll get hit with major works charges in any block undergoing major works. Council ones have the advantage that they'll be getting a lot of work done by the lowest bidder. The disadvantage is that you can't oppose their decision to carry out any work. I'm glad new lifts were fitted to my block before I bought the flat.

Saving is the way otherwise. House prices may come down some more, or at least normalise. People round here are still asking up to 220k for two bed flat, which is humorous.

[colin1]

For my deposit, I had savings, but I also borrowed £3k in a bank loan just before taking out the mortgage, that I didnt declare when signing up for the mortgage.

I'm not saying it will work, but it worked for me.

Robbys point on flats is worth thinking about. A lot of council flats have more living space than starter home private build houses.

Personally I'm not keen on the ground respect aspect, and where I live, houses are cheap. But as living space, flats arent all bad.
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[bladesman]