Why can't I borrow on a buy to let to buy my parents home?
Answered on 11 February 2016 by Nick Morrey
Can you tell me why I can't borrow money on a buy to let mortgage to buy my parents house?
You don't mention whether your parents are moving out, but assuming they are to continue to live there, then this would make it a "regulated buy-to-let" which not all lenders will allow, particularly where they already live there.
There's also a number of other issues to consider too, such as if you go down the route of a regulated buy-to-let would your parents be paying the full market rent? If this is a 'no' then it would mean you having to prove that you could afford the new mortgage, along with all of your current outgoings too.
Then there's issue of whether you are paying full market value for the property? If you are not, then this would make it a "concessionary family purchase" too, which means that we'd need to find a lender who is comfortable with this element as well. In addition because your parents would be effectively gifting you their equity, lenders will typically want them to have taken independent legal advice, and to see confirmation of this.
Whilst this isn't necessarily the easiest case to place, it may still be possible to do. If you would like to discuss this in more detail then please contact one of our mortgage experts on 0330 433 2927.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.