unusual mortgage requirements...any idea where i can go?

[joko]

heres the situation...

I have a house (mine, but still in my dads name legally) that is large enough to be converted into 2 flats...the house needs repairs doing but its not feasible while i am still living in it.

i would like to move somewhere else...so need a mortgage...however as a freelancer who is relatively new to my field i dont have a regular enough income to be considered in normal crcumstances...

so what we'd like ot do is...get a mortgage, but pause the repayments, for 5-7 months while the work converting the house into 2 flats is done by my brother...then once they are complete and have tenants, the mortgage will be paid using their rent, and the other flats rent will pay for the work done.

can anyone tell me a company that would agree to this deal..?
my dad be a guarantor for this

i have asked a few companies and all said i must be th eowner of the property...but its only mine in 'spirit' as its to be left to me in the will.

my dad wont sign it over yet because they live on the rent, which i sometime need paying by the housing benefit.

thanks

[annie0000]

Actaully, can't you just rent somewhere else while the work gets done?

[annie0000]

Okay vibes - wasn't quite sure!

[joko]

the collateral is the house i live in right now...with my dad offering it a collateral as guarantor

if you own a house you do not need a mortgage so not sure where you get that idea from...

the mortgage is for THE HOUSE I MOVE TO...not this one.

my dad owns this house...and wants to use it to secure me amortgage on a DIFFERENT house.

I cannot afford to rent a house...same situation...housing wont pay it....i also cant feasibly move twice...its a 3 story house, 9 rooms and brimming over with stuff...lots of it for work so i cant get rid or put in storage...

thanks

[annie0000]

joko - as I see it, I guess then your choices are:

to wait until you legally own the house and and then mortgage it to buy another when you get the work done.

Wait until you have enough income to obtain a mortgage straightforwardly on the house you want to move to/can afford to rent somewhere else

Stay in the house while doing the work

Move in with your dad while you do the work

or - buy loads of lottery tickets and hope for the best :o)

Maybe a mortgage broker may be able to help more.

[twix123]

Other than speaking to a Financial Advisor/Mortgage Broker, you seem to have a few problems with this project!

1. It seems that your father relies on the rental income, but during the period of renovations there will not be any income.

2. It seems that you will have to borrow the money to finance the renovations, as your original post states that the rental on the 2nd flat will pay for the work to be done.

3. You will require a substantial deposit to put down on a new property, very few lenders give 100% mortgages nowadays.

4. No lender will give a payment holiday at the beginning of a mortgage. You will have to pay interest at a minimum, even without any capital repayments.

5. You state in a later post that you will have an income of £1000 per month, but won't this be going to your father? It may also lead to Inheritance Tax problems if, in effect, your father were to be paying your mortgage.

[DocHH]

If as you claim you own the house, why are you paying rent to your father? QED you do not own the house. You then, in times of low income claim housing benefit, which you claim your father needs to fund his retirement, despite him owning other properties. This smells of benefit fraud to me!

[joko]

hi twix.
re 1, 2, 5
yes he knows he wont get rent for 6 months...hes ok with that an has other rents to live on for the time being.

my brother owns a renovations co, so he will pay do the work, an i will pay him back with the flat rents at a manageable amount, so no probs there.

the rent i currently pay is low (my dad will not take any more) so much of the £1000 will be left

re; 3, 4
yes these are the problems i have ... i am aware of these issues...i just need a way round them.

i can get a loan for a deposit through my brother..but as i say i cannot a mortgage with which to pay a deposit....

i know 'most' wont allow the payment holiday at the start...but there must be one that will based on that evidence we can provide that the deal is totally safe and legal...one that specialises in unusual cases...?

[boxtops]

It would be a huge risk for a mortgage lender, joko, to pay you money up front then give you 6 months' holiday before you start paying back - I'm not being flippant but it's not like going to DFS and buying a sofa, this is serious money. Also - I found to my cost that when I needed to take a "payment holiday" in the middle of a long term mortgage because we had no money when OH lost his job, the monthly payments on the rest of the mortgage shot up once I started repaying, to allow for the payments which I hadn't made during the holiday. You don't get let off the payments, they get you in the end. You need specialist help with everything taken into consideration, I can only suggest you see a financial adviser with experience of loans on commercial and letting properties, a.s.a.p.

[joko]

cheers boxtops...yes looks like i need a specialist..

[bushbaby_de]

I can't add much to the comprehensive finance answers above, but just wanted to check that you know you need planning permission for the flat conversion, which adds more time and money to the proposal?

[tamborine]

a:you need at least 25% of the cost of the property for deposit on most standard mortgages and sufficient salary to cover repayments.
b: or sufficient collateral to cover cost of new property.
c: Dad selling house to you @ very reduced cost due to 'dilapidations'. Remind dad if he needs care & owns the house, costs will be taken from his property.