Buying out relative from property

Looking for a bit of advice. We have found a house that we really want and it ticks all the boxes. We have 130k cash at the moment but we need to get the rest of the purchase price from a relative, (prob 80k). We are in a position that we can get a loan from a relative for the outstanding amount.

We have signed contracts but can walk away at any stage before the closing date. The vendor has indicated that the sale has to close in three weeks or he will walk away himself. We are waiting since November 2017 to get an answer from kbc around mortgage application. We probably should have applied to all but the broker went with kcb and we stuck with him. (Regretting that now though).

Two questions

- If we buy the property now, Can we get a mortgage on the money loaned to us from our relative and maybe a little more? They would be on the title and we would be effectively buying them out. We would be looking to do a bit of work on the house as well so probably looking for 140k.

- If a mortgage isn't available does anyone have any suggestions to get that kind of money over the longest term.

Financial background is two civil servants with combined income of 115k, two kids and no other debt. Many thanks in advance

House costs €210k
Cash in hand €130k ( well done )
Mortgage required €140k

Your post is confusing, where does the relatives money come from.

If the above is correct I would say any lender would provide you with the mortgage so not clear why you went the broker route, go direct to a Bank ( where your accounts are ) and apply immediately.

Contracts are binding, you can't walk away, once these are signed you risk any deposit paid being lost.

If the process is delayed seek an extension on the closing to allow for mortgage drawdown.

Thanks,

I wish it was more straight forward. There is a lot of stress in our house at the minute and all help is appreciated.

- Mother and father giving gift and that is where the 80k is coming from. They could buy house outright in their own name, could we buy it off them down the line if the mortgage doesn't come through in time.
- using a broker as he is family friend. Long story but should have approached a number of lenders direct.
- we have signed the contract with a proposed long closing date but the vendor hasn't signed.

Finally, can we get a mortgage and buy out our parents interest through a convention mortgage application.

Thanks very much again

+1 Palerider.

Talk directly to a bank and get an indication of whether they will approve or not. If its a straight forward case you'll have enough to show the vendor you'll be able to close very quickly.

However, from your previous post last year, your financial history might be a bit complex which might be taking the time?

Make sure your solicitor included a 'subject to mortgage' clause in contract - if not you can't simply walk away.

If I understand your post, you might borrow money from a relative, effectively buying the house with cash, and you are wondering if it's then possible to get a mortgage later?

It might be possible, but it depends on your circumstances. You would need an equity release mortgage which the banks haven't pushed since the crash, but they are available. However, you'd need to pass their underwriting and one standard criteria would be proving mortgage repayments over a period, which you won't have.

I'd pursue the straight forward mortgage route first, rather than getting more family loans and not being sure if you can refinance them later.

Carolb said:

They could buy house outright in their own name, could we buy it off them down the line if the mortgage doesn't come through in time.

Click to expand...

Yes, they could do this.

You would end up with two sets of stamp duty and two sets of legal fees, so an extra €3k or €4k.

Not sure if the solicitor who acts for your parents in buying the house would be allowed to act for them in selling it to you and for you in buying it from them. I suspect not, so you might end up with 3 sets of legal fees. Negotiate this with your solicitor beforehand.

Brendan

Thank you all very much for your advice