Your browser isn't supported
It looks like you're using an old web browser. To get the most out of the site and to ensure guides display correctly, we suggest upgrading your browser now. Download the latest:

Welcome to the MSE Forums

We're home to a fantastic community of MoneySavers but anyone can post. Please exercise caution & report spam, illegal, offensive or libellous posts/messages: click "report" or email forumteam@.

Search
  • FIRST POST
    • GelF
    • By GelF 6th Jan 18, 9:47 PM
    • 8Posts
    • 2Thanks
    GelF
    Remortgage to gift money
    • #1
    • 6th Jan 18, 9:47 PM
    Remortgage to gift money 6th Jan 18 at 9:47 PM
    I'm looking for some advise please...

    We have a fully paid off mortgage for our family home. The property is worth about £270k and we intend to live in the house for few more years before downsizing.

    I am looking into an idea to take out another mortgage for about £220k and give the cash to my son to buy his first home with his partner. He has a very good income but is struggling to get a mortgage as his income fluctuates and he cannot yet produce proof of income (he is an online trader). He can contribute a £30k deposit and we would expect him to pay back the full cost of the mortgage repayments.

    I see this as advantageous as I assume that, as first time buyers, they will pay no stamp duty. If we buy it and then give it to him we will be subject to second home stamp duty.

    Can I please ask for views on this?
Page 1
    • ValiantSon
    • By ValiantSon 6th Jan 18, 10:06 PM
    • 238 Posts
    • 222 Thanks
    ValiantSon
    • #2
    • 6th Jan 18, 10:06 PM
    • #2
    • 6th Jan 18, 10:06 PM
    I would be amazed if anyone would lend you this money under the circumstances you describe.
    • enthusiasticsaver
    • By enthusiasticsaver 6th Jan 18, 10:47 PM
    • 5,215 Posts
    • 9,920 Thanks
    enthusiasticsaver
    • #3
    • 6th Jan 18, 10:47 PM
    • #3
    • 6th Jan 18, 10:47 PM
    What happens if he can’t make the repayments or is not in a position to take the mortgage over when you want to downsize?
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • CommitedToChange
    • By CommitedToChange 6th Jan 18, 10:50 PM
    • 1,221 Posts
    • 3,849 Thanks
    CommitedToChange
    • #4
    • 6th Jan 18, 10:50 PM
    • #4
    • 6th Jan 18, 10:50 PM
    This is the type of thing that destroys families.

    Don't do it for so many reason.
    Attempting to buy a house
    • Thrugelmir
    • By Thrugelmir 6th Jan 18, 10:51 PM
    • 56,780 Posts
    • 50,152 Thanks
    Thrugelmir
    • #5
    • 6th Jan 18, 10:51 PM
    • #5
    • 6th Jan 18, 10:51 PM
    He has a very good income but is struggling to get a mortgage as his income fluctuates and he cannot yet produce proof of income (he is an online trader).
    Originally posted by GelF
    What if his good fortune takes a turn for the worse?
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • GelF
    • By GelF 6th Jan 18, 10:59 PM
    • 8 Posts
    • 2 Thanks
    GelF
    • #6
    • 6th Jan 18, 10:59 PM
    • #6
    • 6th Jan 18, 10:59 PM
    We could afford the repay the mortgage if he hit problems but would have to get him to sell.

    At the moment he is considering renting but because of no proof of income issue, he would have to pay at least a year in advance which would be a minimum of £12-14k upfront. I see this as dead money.He could pay the mortgage for less than this.
    • enthusiasticsaver
    • By enthusiasticsaver 6th Jan 18, 11:04 PM
    • 5,215 Posts
    • 9,920 Thanks
    enthusiasticsaver
    • #7
    • 6th Jan 18, 11:04 PM
    • #7
    • 6th Jan 18, 11:04 PM
    Suppose he and his partner refuse to sell? You have gifted them the house. In the eyes of the law it is theirs so you have no legal redress.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • CommitedToChange
    • By CommitedToChange 6th Jan 18, 11:08 PM
    • 1,221 Posts
    • 3,849 Thanks
    CommitedToChange
    • #8
    • 6th Jan 18, 11:08 PM
    • #8
    • 6th Jan 18, 11:08 PM
    He could (not saying he will but things to consider)

    Take your money and spend it not on a house but other things

    Buy a house and never repay you

    Lose job and never repay you

    Split with partner - they get half the house never repay you

    There are many threads about family lending money and it all going wrong.

    Nothing wrong with renting for a while, where on earth does he live that he has to pay £14 grand up front???

    You can rent with a guarantor which would be an idea.
    Attempting to buy a house
    • GelF
    • By GelF 6th Jan 18, 11:13 PM
    • 8 Posts
    • 2 Thanks
    GelF
    • #9
    • 6th Jan 18, 11:13 PM
    • #9
    • 6th Jan 18, 11:13 PM
    Yes, I get that it is a gift so he could do as he likes.

    I'm just looking for pointers on if a bank will lend under those circumstances and if so is there anything that i should be worried about legally.
    • CommitedToChange
    • By CommitedToChange 6th Jan 18, 11:16 PM
    • 1,221 Posts
    • 3,849 Thanks
    CommitedToChange
    Legally you should be worried that if it all goes wrong you could lose your home.
    Attempting to buy a house
    • -taff
    • By -taff 6th Jan 18, 11:19 PM
    • 7,335 Posts
    • 5,391 Thanks
    -taff
    If you give him the money to buy a house, it's his house, legally. You have no legal rights for him to repay your mortgage.

    It's a terrible idea.
    • GelF
    • By GelF 6th Jan 18, 11:28 PM
    • 8 Posts
    • 2 Thanks
    GelF
    When he went to estate agent they said, without a credit history or proof of income he would have to a a years rent in advance. We live in the South East and the average rent in the area is about £1k pm. plus a deposit for a decent house.

    We would not lose our home as we could afford the payments if he couldn't. We are aware of the dangers that his income is not steady but he could pay us for a couple of years in advance with his current funds.

    As for all the various family dispute issues etc, we would obliviously weight up this up very carefully before any commitment is made
    • CommitedToChange
    • By CommitedToChange 6th Jan 18, 11:33 PM
    • 1,221 Posts
    • 3,849 Thanks
    CommitedToChange
    Plenty of letting agents or rent direct from a landlord with you as a guarantor.

    One estate agent doesn't speak for all.
    Attempting to buy a house
    • davidmcn
    • By davidmcn 6th Jan 18, 11:52 PM
    • 6,547 Posts
    • 6,454 Thanks
    davidmcn
    If you're expecting him (in fact, relying on him) to make repayments then it's not a gift you're making to him, it's a loan. If you want security then you could get him to give you a charge over his property - then at least you would have the power to sell his house if you had to.

    But if you don't have another reliable source of income sufficient to service your mortgage repayments, I can't see any lender being interested, as ultimately it would be pretty much as risky as just lending directly to your son.
    • GelF
    • By GelF 6th Jan 18, 11:54 PM
    • 8 Posts
    • 2 Thanks
    GelF
    That's an idea. I didn't realise that we could guarantee his rent.
    I'll do a bit research on that.

    Ultimately it doesn't solve the issue that he will be paying a huge amount to a third party when he could be buying. Just want him to have the same opportunities that we did 25 years ago
    • getmore4less
    • By getmore4less 7th Jan 18, 7:23 AM
    • 31,168 Posts
    • 18,681 Thanks
    getmore4less
    I'm looking for some advise please...

    We have a fully paid off mortgage for our family home. The property is worth about £270k and we intend to live in the house for few more years before downsizing.

    I am looking into an idea to take out another mortgage for about £220k and give the cash to my son to buy his first home with his partner.

    If this to be a gift or a loan?

    He has a very good income but is struggling to get a mortgage as his income fluctuates and he cannot yet produce proof of income (he is an online trader). He can contribute a £30k deposit and we would expect him to pay back the full cost of the mortgage repayments.

    Ah a loan where he pays the mortgage on your house.

    If he pays your interest then you will need to declare that as income and be taxed at your marginal rate.


    I see this as advantageous as I assume that, as first time buyers, they will pay no stamp duty. If we buy it and then give it to him we will be subject to second home stamp duty.

    Can I please ask for views on this?
    Originally posted by GelF
    lenders not keen on lending money that you intend to use for a loan to someone else.
    • getmore4less
    • By getmore4less 7th Jan 18, 7:26 AM
    • 31,168 Posts
    • 18,681 Thanks
    getmore4less
    (he is an online trader).
    could move to a cheaper area.
    • enthusiasticsaver
    • By enthusiasticsaver 7th Jan 18, 8:48 AM
    • 5,215 Posts
    • 9,920 Thanks
    enthusiasticsaver
    I think as getmore4less says when you declare the reason for the remortgage to your lender they will not be keen. You will also need to declare the mortgage repayments as income. How long is it before they will take his income into consideration? Surely he cannot be the only online trader to want to buy a house.

    If he earns a high salary then it should not take too long for him to save up a larger deposit and maybe then they will take his proof of income. You could give him some cash to help with a deposit but I would take it from savings not borrow for it.
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
    • AnotherJoe
    • By AnotherJoe 7th Jan 18, 8:51 AM
    • 7,919 Posts
    • 8,512 Thanks
    AnotherJoe
    I am looking into an idea to take out another mortgage for about £220k and give the cash to my son to buy his first home with his partner. He has a very good income but is struggling to get a mortgage as his income fluctuates and he cannot yet produce proof of income (he is an online trader).

    Can I please ask for views on this?
    Originally posted by GelF
    There are so many dangers and flaws with your plan it’s hard to know where to start, but ata simple level, why can’t he simply wait a year or two until he can show evidence of income?

    Or, is in fact his income very uncertain and therefore may never be able to get a mortgage in which case he may not be able to repay you and then you’d be up that famous creek, paddle-less.

    Just want him to have the same opportunities that we did 25 years ago
    Originally posted by GelF
    Did you have those opportunities because you weren’t in a risky occupation without consistent income?
    Last edited by AnotherJoe; 07-01-2018 at 8:56 AM.
    • enthusiasticsaver
    • By enthusiasticsaver 7th Jan 18, 8:56 AM
    • 5,215 Posts
    • 9,920 Thanks
    enthusiasticsaver
    I empathise with your wish to help your son and I agree house prices in the south east and London are just ridiculous. One reason why we moved away 30 years ago.

    I think Another Joe makes a good point that he can wait a year or two until he has proof of income and in the meantime save as much of that fantastic salary as possible. You could act as guarantor if you want to help. Wha5 about his partner? Does she not have a steady job either?
    Debt free and mortgage free and early retiree. Living the dream

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com
Welcome to our new Forum!

Our aim is to save you money quickly and easily. We hope you like it!

Forum Team Contact us

Live Stats

184Posts Today

2,130Users online

Martin's Twitter