Parents offering to give me their house for £15k less than value

[alydamw]

Hello, i need some advice. Me & my partner are currently saving up for a deposit on a home. We have £5,000 at the moment. My parents have a 3 bed home valued at £135,000. They have offered to let us mortgage it for £120,000 & the remaining £15,000 would be our 'gifted deposit'.

At first we though, wow amazing idea but we are having some doubts and need some second opinions.

If we accepted, then a year later decided to sell the house, say it was valued at £135,000 again. Am i right in saying we would recieve the £15,000 back? and then we could put this down as a depsoit on a new home?

Any advice would be appreciated - Are we stupid to turn this down? Or should we save our own money and forget about this?

Please help.

Thanks
Alyda

[AndiRM]

Hi Alyda,

It's worth going through the terms and conditions as laid out by your parents, as they are mainly accepting a £15k reduction in the sale of their home. It does not seem to me that they would expect you to take this £15k with you if you sold the property on, but that would be down to them. Even though you are 'buying' from parents, you and your partner would still need to prove to a mortgage lender that you could afford a £120,000 mortgage, and you would still have to pay conveyancing solicitor fees.

Property and family can sometimes be complicated. For example, if you were buying from anyone else, you would get a survey of the house to ensure that it was up to code and there was nothing wrong with it. If there was, you would usually ask for a reduction on the price, but in this case, you may feel awkward doing that. We always recommend getting a house survey. If there was something wrong with the property that would cost you a lot of money in repairs, would you still want to go through with purchasing it?

It's also worth considering how much your parents would still consider it 'their' property - would you be freely allowed to make interior changes, would they feel they had a say in what you do with/in the home? Working all these points out in advance will make you feel more comfortable in what to expect if you do go through with their offer.

If you decide to continue focusing on your deposit, it's worth considering an appropriate ISA, like a Help to Buy or Lifetime ISA, to ensure you're getting not only a good rate of interest, but the extra money from the government for saving. You and your partner can have one each, to help you save more and get more of a bonus.

Best of luck with your decision!

[alydamw]

Hi. Thank you for such a quick response.

My parents have mentioned many times that once the house is ours then any money made - or any changes we wish to make would be down to us. They would never expect any money from the property once it isn’t longed in their name.

There is nothing wrong in regards to work needing to be done. Only the odd bit of decorating etc to make it more to our taste.

do you think this would be a good idea in terms of us poteiencally making around 15k on the property?

thanks