Remortgaging a Cash Purchase

Posted on 27 October 2010 by jane


I am a first time buyer and fortunate in that my parents are able to help me out with the purchase of a property. I have some money for a deposit and one route we are considering is them lending me some more deposit in exchange for a percentage of the property(as per one of your previous Q&As)

They are able to come in as cash buyers for the total cost of the house, which seems helpful for me in that I would have a stonger negociating position on price and could move a lot faster. However, if they were to do this i.e give me the money so I could make a cash purchase, could I simultaneously be in the process of raising a mortgage on the property so that I could pay back my percentage of the property to my parents after the purchase?  This would be like a bridging loan?

Jane

This is certainly possible, but it will restrict your choice of Lender considerably. The hope then is that you meet the criteria of these Lenders and are able to arrange a mortgage and repay your parents.

The recent banking crisis saw many Lenders withdraw from the market until you have owned the property to be remortgaged for at least 6 months. If you are able to put off paying back your parents until then, you will have a far greater choice of products.

I recommend that you speak to an independent mortgage adviser now about your situation. They will be able to assess your current situation and let you know what Lenders and their products are available to you. They will also be able to give you an idea of what would have been available had you owned the property 6 months and this will help you decide how to proceed.

Peter

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.

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