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  • 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 2
    • Nebulous2
    • By Nebulous2 7th Jan 18, 8:56 AM
    • 1,701 Posts
    • 1,039 Thanks
    Nebulous2
    How old are you? A lot of mortgages wont go past normal retirement age, which means that you could find it difficult to get a big mortgage. The monthly payment over a shorter period makes it difficult to get approval on the grounds of affordability.
    • GelF
    • By GelF 7th Jan 18, 1:43 PM
    • 8 Posts
    • 2 Thanks
    GelF
    Many thanks for all your thoughts. I was disappointed to find that there were no positive replies or people who had done it. So I think that, after consideration, we will let him stand on his own.

    I will say that I cant help but to think that he will be paying over £1k per month to effectively pay someones else's mortgage and give them a profit. That is against everything that I believe the housing market should be for.

    When we bought ours, yes, we had a steady incomes but our mortgage was based on roughly 3 times our salaries. Today's youngsters are being asked to get mortgages for 10 times their income or more. As a society, this is not a good thing.
    • poppy10
    • By poppy10 7th Jan 18, 6:03 PM
    • 5,905 Posts
    • 7,141 Thanks
    poppy10
    When we bought ours, yes, we had a steady incomes but our mortgage was based on roughly 3 times our salaries. Today's youngsters are being asked to get mortgages for 10 times their income or more.
    Originally posted by GelF
    Parents like you acting as the Bank of Mum and Dad to help their adult children buy houses they can't afford are part of the problem contributing to ridiculously high house prices
    Signature changed by MSE ForumTeam
    • ValiantSon
    • By ValiantSon 7th Jan 18, 8:19 PM
    • 240 Posts
    • 227 Thanks
    ValiantSon
    Parents like you acting as the Bank of Mum and Dad to help their adult children buy houses they can't afford are part of the problem contributing to ridiculously high house prices
    Originally posted by poppy10
    Really?

    I entirely understand the OP's desire to help her son, but her plan is full of so many problems that it really is a non-starter. Nonetheless, blaming her and other parents who have tried to use their wealth to benefit their children is a bit unfair. Should they instead pull the ladder up and say, "I'm alright, Jack."? Neither the OP, nor other parents who have loaned money to their children at 0%, are responsible for the increase in house prices.

    There are many factors that have contributed: partly supply and demand; partly the very fact of issuing mortgages - effectively creating money that is now tied up in property; partly through speculative purchasing. While parental lending has enabled some of this it is not a primary cause and is more a response to the current situation which has an unintended consequence of further facilitating it (to a relatively small degree).

    Primary causes are more the transition from a position where the majority of people were not homeowners to one where they were and expectation was that they should be too. Thatcher's introduction of "Right to Buy" (worsened by the discount price offered and the blocking of new social house building), especially when combined with policies designed to increase consumer credit and mortgage lending, created the fundamental conditions for a rapid rise in house prices. This was then exacerbated by the factors above. (Labour more or less continued and extended these policies when they came to power in 1997).
    • GelF
    • By GelF 7th Jan 18, 11:59 PM
    • 8 Posts
    • 2 Thanks
    GelF
    Parents will and should always help their kids.

    This is not the problem. In the South East especially, the problem is greedy investors buying properties as an opportunity to make easy money rather than as a home to live in. I would be happy for the housing market to crash so future generations can buy for themselves rather than line the pockets of investors.

    I speak from experience after buying my one and only home 27 years ago and living there happily ever since albeit with a few home improvements. As I said I want the same opportunity for my family.

    Incidentally, we do not consider ourselves as OPs at the tender age of 52 and 49 . And the assumption that I'm female is also incorrect - fathers do care about this as well!.

    So as already mentioned, given the complications already outlined in the thread, unfortunately will not be pursuing this idea.
    • jennifernil
    • By jennifernil 8th Jan 18, 12:33 AM
    • 5,009 Posts
    • 2,086 Thanks
    jennifernil
    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.
    Originally posted by davidmcn
    If you were able to borrow the amount needed by raising a mortgage on your own home, this would be the sensible way to organise things.

    The house would be his but you would place a charge on it , in effect a private mortgage, it is not expensive to do.

    You would however have to declare and pay tax on any interest you charge him.

    I have done something similar for our daughter, though the sums involved are much smaller and the money loaned came from my savings. i have placed a charge on the property and drawn up a simple loan agreement. As a non taxpayer, though I declare the interest I am not taxed on it.
    • ValiantSon
    • By ValiantSon 8th Jan 18, 3:37 AM
    • 240 Posts
    • 227 Thanks
    ValiantSon
    Parents will and should always help their kids.

    This is not the problem. In the South East especially, the problem is greedy investors buying properties as an opportunity to make easy money rather than as a home to live in. I would be happy for the housing market to crash so future generations can buy for themselves rather than line the pockets of investors.

    I speak from experience after buying my one and only home 27 years ago and living there happily ever since albeit with a few home improvements. As I said I want the same opportunity for my family.

    Incidentally, we do not consider ourselves as OPs at the tender age of 52 and 49 . And the assumption that I'm female is also incorrect - fathers do care about this as well!.

    So as already mentioned, given the complications already outlined in the thread, unfortunately will not be pursuing this idea.
    Originally posted by GelF
    A couple of things: firstly, I was actually defending you (!), secondly, OP stands for "original poster" and has nothing to do with your age. I apologise for referring to you as female, but I had misremembered and thought you had actually identified yourself as your son's mother. If my error caused offence then I apologise, but if it were me I wouldn't be bothered.

    I wish you and your son well for the future.
    • GelF
    • By GelF 8th Jan 18, 8:04 PM
    • 8 Posts
    • 2 Thanks
    GelF
    ValiantSon
    I must apologise to you.
    I feel really stupid now - I assumed OP was old people!. What an idiot I am. :-)
    It was my first ever effort on a forum.

    I was not upset at all by the by either the age or gender mix up. Just a bit frustrated for the general position that young people find themselves in.

    Thank you for taking the time to reply.
    • ValiantSon
    • By ValiantSon 8th Jan 18, 8:41 PM
    • 240 Posts
    • 227 Thanks
    ValiantSon
    ValiantSon
    I must apologise to you.
    I feel really stupid now - I assumed OP was old people!. What an idiot I am. :-)
    It was my first ever effort on a forum.

    I was not upset at all by the by either the age or gender mix up. Just a bit frustrated for the general position that young people find themselves in.

    Thank you for taking the time to reply.
    Originally posted by GelF
    Dear GelF,

    No need to apologise. I may well have been a bit quick in my reply, and some of the abbreviations people use (myself included) can be confusing if you haven't ever come across them before.

    I sympathise with how you feel and wish that I or others had been able to offer you more positive advice about how to proceed. I agree that the current situation with house prices is crazy, particularly in the South East.

    Best wishes.
    • enthusiasticsaver
    • By enthusiasticsaver 8th Jan 18, 9:00 PM
    • 5,242 Posts
    • 9,953 Thanks
    enthusiasticsaver
    Many thanks for all your thoughts. I was disappointed to find that there were no positive replies or people who had done it. So I think that, after consideration, we will let him stand on his own.

    I will say that I cant help but to think that he will be paying over £1k per month to effectively pay someones else's mortgage and give them a profit. That is against everything that I believe the housing market should be for.

    When we bought ours, yes, we had a steady incomes but our mortgage was based on roughly 3 times our salaries. Today's youngsters are being asked to get mortgages for 10 times their income or more. As a society, this is not a good thing.
    Originally posted by GelF
    Whilst I don't disagree entirely it is worth pointing out the interest rates now are considerably lower than when you and indeed I got our first mortgages. I also think you may be talking about London and the South East rather than nationally as my daughters have both bought houses with multiples of 3 and 4 times salary, a long way short of 10. We no longer live in the south east as we found it extortionately expensive even back in the 80s.
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