mortgage

[karenmac60]

I'm thinking of buying my council house and I'd get a big discount. I have an outstanding loan I'd like to be able to repay to make my monthly bills more manageable. If I borrowed 80% of my home's value it would give me enough to buy the flat and pay off the loan and the repayments would be around the same as I pay in rent, but would the bank allow me to do that?

[starone]

If you get a mortgage you still have to produce 10% as a deposit, so that if the house cost, say £120,000 you have to produce £12,000. Have you got that amount in cash or in the Bank? I had a vague idea, which could be wrong, that the Council will lend you money. It might be worth enquiring. It is a very good buy if you can do it, but remember that once you own it you are responsible for all repairs, and if it is a flat you might find it difficult if anything goes wrong with the other flats. Not being an old misery, just trying to point out the difficulties.

[Nosha123]

Mortgages are so different to when I borrowed just a few years ago. Call the bank to ask advice... They seem to want so much up front these days as a deposit!!!

[boxtops]

If your bank will agree then in principle, yes. I remortgaged a while ago to do just that, to reduce outgoings by cosolidating debts. Not sure if it's the same in Scotland but my bank were keen to help, they could see I was struggling. You'll need to ask your bank though.

[cathfromsaron]

you can get a mortgage - less the perecentage deposit and fees etc - for what the property is valued at, so with the discount you could realise some capital 'for improvements'!

if you choose to use this to repay a loan too, then you can! BUT if you have failed to pay this loan on time you may not have a good credit record, so getting a mortgage may be harder!

[karenmac60]

My flat is worth around 50k but I could buy it for about 18k. Even if I borrowed 40 then that would be 80% of the value - so that would in essence be the same as me having a 20% deposit without actually having the cash upfront would it not? Basically they won't lend you the full amount which is why you need a deposit. I realise I would have other expenses but I would be able to save more on a monthly basis so I'd have funds there if needed. I've always made my payments and I'm not actually struggling, but it would just free things up a bit and I'd have paid it off by retirement age so I wouldn't need to worry about rent.

[boxtops]

go for it karen - it's a nice feeling not to have to scrimp so much every month

[karenmac60]

I think I'll pop into the bank on Monday Boxy :-)

Thanks all! xx

[Hymie]

The important thing is to be totally up front about your situation and exactly what you want the money for.

From the bank’s prospective, they have the flat as security against your ‘loan’ – so providing that you meet all their requirements, I don’t see a problem.

If you are refused by your bank, it’s worth asking other mortgage lenders if they would oblige – they might even offer a better rate.

But playing devil’s advocate, imagine Joe Soap walks into a bank and says ‘I want to buy this house for £200k with a mortgage from your good selves’.

‘OK says the bank’s mortgage advisor – I see that as a client of the bank that you have the required income to cover the mortgage repayments – but what about the minimum 10% deposit we require?’

‘Ah’ says Joe Soap ‘You see - the house is actually worth £220k, and that extra £20k is my deposit’.

At this juncture the bank’s mortgage advisor will point out the flaw in Joe Soap’s (and your) plan re their mortgage lending requirements.