ADP

Hi all,

Any thoughts welcome on this.

I live in a 3 bedroom house rented to the 3 of us. The landlady is thinking of selling the place, its only a year old and is in a great location/nice area. She wants £290K for it.

Its out of my price range, but me and my dad are thinking of doing some sort of joint buy. He has a house worth £500k full paid for, he also has an income of lets say £30k. I have a similar income.

So if we wanted to buy the house what would we do with regards to mortgages/deposits etc ?? (the plan is to rent it back out to me and 2 other currently in it and if they leave just advertise the room). It currently rents for £1100 a month.

Any thoughts???

cheers

Andy

fast bloke

Your Dad could raise 200k by remortgaging his house in joint names with you ( usually income multiples are about 3.5 joint for <75% ltv. Use this as a deposit and get a buy to let mortgage for the other 90k. You will need about £600 a month rental income to justify the BTL mortgage.

Residentail rates are generally lower than BTL rates, so the more you can raise on your dads house the less it will cost you overall

Old_Fart

Remeber though that the interest paid on the mortgage can be used to offset income from the rental, so it's often in you best interest to get as large a mortgage as you can on the BTL place..if you remortgage the £500k place you will not be able to offset rental income vs that. Rental income will be taxed at 40% for you guys..so beware!
Rgds
Chuck

ADP

I think I need to go see a mortgage advisor this is more complex than I had first thought

milo

problem with this is, it makes it VERY difficult to justify why you shouldn't have to pay CGT when you come to sell.

"it's my main residence, not an investment" -- "so why do you have a btl mortgage?"

fast bloke

mainly cos given 2 30k incomes you can't get a 290k mortgage without telling porkies on a self cert. Anyway - assuming it is going to be ADP's main residence he can say that he took a BTL as he knew that he was renting the other two rooms, and he thought you had to have a special mortgage in order to do so. He will have all the paperwork required to show that it is/was his main residence.

ADP - Now I have the computer out -

Based on a rental income of 1100 a month you could get a BTL mortgage for 170k. Raise the other 120k on your fathers property. Don't pay rent to yourself - you will end up paying tax on it You just live in it and take the rent from the other two.

Keep all the paperwork forever - every bill you get to the house just in case the taxman ever asks you for CGT. Remember - As far as the taxman is concerned you are guilty until you prove yourself innocent

ADP

Ok so how about my Dad re mortgages his house for 290k

Gives me 290k and I buy the house outright so to speak

I then rent the rooms out myself and pay my old man £1100 quid a month??

OllyK

I suspect you would run in to issues on the amount you can "Gift" to somebody.

If he loaned you the money on some basis you may be OK, but that is likely to be a whole new can of worms! Think you need to get in touch with an accountant and see what the best options are.

Scooby96

Get an 85% BTL mortgage at 4.99% then tell the mortgage co that you've decided not to let it out, convert to a 'normal' mortgage, problem solved!

Scooby96

If you can 'get' £53,500 as a deposit then as long as you can get rental income of £1,332.54 pcm you've no need to borrow against your old mans gaff

ADP

"get" I see ok

Spoon

Also once the purchase is sorted in your name, you can use your "rent a room" tax free allowance.