Buying house off parents

S

siobhan123

Guest
Hi,

Myself and my boyfriend want to buy a house off my boyfriends father and uncle. They got left land and are building a house and selling it jointly.

My bf father has told us that they would sell the house to us, they are planning on getting the house valued they think it will be around 250,000, and will sell it to us for half of the valued price (125,000), meaning his uncle would get the 125,000 and his father does not want his half.

The house will not be furnished at all. It will have doors,windows and plaster but apart from that we will have to put in kitchen, 2 bathrooms, all flooring etc.

We have figured out it will cost approx 35,000 at the most to do all this work after we buy the house. but would need to move into it as soon as we can after buying cos we cant afford to pay mortgage plus rent.

We dont have this sort of money, and want to find out whether its possible to add it onto the price of the house with the mortgage. If the value of the house was 250,00 and we were looking for a mortgage of 125,000 and an extra 35,000 on top of this thats still well below the house value, therfore shouldnt really be a risk to a mortgage company.

Ive stuck in our details on a few web sites and generally we are approved for mortgage of up to around 165,000 - 170,000

Does anyone know anything about getting this extra money on top of your mortgage? ie if its possible.

Also could anyone give us information about solicitors, his father has a solicitor, if we both used the same solicitor will this reduce fees as it will be the same man transferring everything and there shouldnt be any problems as its his father we are buying off.
 
You need to tease out the possible tax implications of this. Normally a house sold for a discount to the market value can give rise to tax issues. In this case it may be that the implied €125K "gift" or waiver falls under the relevant gift tax exemption threshold but only if the gift is from father to son (and not to you). There may be other tax implications (e.g. is this actually a new house and are you first time buyers etc.).
This seems to be a "how much can we borrow" type of query. This thread might be of use to you. Note that lenders normally calculate the loan to value ratio on the purchase price but may also use the (higher) market value in this case.
I'm not sure that a solicitor can or will act for both seller and buyer in situations such as this due to the potential for conflicts of interest (regardless of the family relationships).
 
I can't comment on the tax implications but assuming you qualify on your income for the sum you need and the valuation comes in at €250,000 you shouldn't have an issue - effectively you are being gifted your boyfriend's fathers half of the property.

Do bear in mind though that the lender will probably retain (hold back) a proportion of the mortgage until the property is habitable - i.e. working kitchen and bathroom and all services connected.

Sarah

www.rea.ie
 
Thanks for replies, yes we are first time buyers and the house would be new id say as it has never been lived in and was built from scratch. They inherited their parents house and they have split the land in two and built a second completely seperate house on it. They are planning on renting out the existing house.
 
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