Can we buy my mum’s house and build her an annexe to live in? | Mortgages

s I have a complicated question about a mortgage for you. We are looking to buy my mom’s house (wholly owned by her) and build her grandma’s extension on the same property.

Our house has a mortgage of about £270,000 and it is worth about £345,000. My mom’s house is worth around £700,000.

We are considering selling our house, buying my mum’s house, continuing to pay a mortgage of around £200,000, using this to build the grandmother’s extension and carrying out other renovations on the main house. I hope this means that Mom will still be happy, as she will have a new custom-built home in a place we are familiar with nearby.

The only thing that worries me is that I’ve become self-employed for the past two years, and I’ve gone on to earn half of what I’ve been doing. I worry that my existing mortgage suppliers will not want to keep our business, and that others will stay away from us.

a Your question is confusing and not complicated. If you sell your home, after your mortgage is liquidated (which you have to do when selling), you’ll be left with approximately £75,000 in cash. This might be enough to get you started on construction work on the grandma’s extension (and it might have been finished), but it’s not close enough to buy your mom’s house either. To be able to do this, you will need to raise a mortgage of at least £625,000 (£700,000 minus £75,000). And you may need more than that to be able to finish the construction work as well. Given what you say about your earnings from self-employment, I don’t think a mortgage of this size is an option for you.

What may be an option for you is to increase your mortgage which you can based on your earnings and your partner’s earnings and use that to buy the house. But for that to work, your mom has to sell you her possessions for much less than you’re worth. I’m not sure I would recommend that she did – especially if you have siblings, who might take a dim view of such a measure. Another option is for your mom to sell you a share of her house and thus become a co-owner with you, but I’m not sure that would go down better either.

Unless you can raise £700,000 out of nowhere, you need to go back to the drawing board to come up with a plan that you can fund. If this involves getting a mortgage, it would be a good idea to hire an independent mortgage advisor who can find a company willing to lend to the self-employed and this will also help in financing the construction work.

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