Joint mortgage with daughter

haven*of*peace

Hi all

My first post here, so please ge gentle with me!!

My wife and I are nearing 60 and have paid off our mortgage - about £250K value.

Our daughter is 30 this year and has landed back with us after two gap years. She was buying a flat with a boyfriend in London but that relationship fell through and the proceeds have now gone.

She isn't earning enough to buy even a starter-home on her own and is being very cautious with a relationship, so only one income.

Whilst she likes living with us and we like her here, she feels she should be on her own at 30.

We're considering buying a house with her, with an annual review so she can buy us out of more and more of our stake.

Does anyone know a good way to go about this? Does anyone do a double-funded mortgage?

(Originally posted in the over-50s forum)

Cheers,

HP

Badgergal

My mother holds a mortgage jointly with me because I would never have got one on my own. I paid all of the deposit and pay all of the payments on my own - it is a struggle (living on own is always expensive) but I knew it would be - she is in no way responsible for contributions (to my mind) though of course technically she is if I defaulted.

I hope to get her name removed at some point when I am earning a bit more, or perhaps I could prove to the BS that I can afford the repayments by showing that I have made them on my own income for the past two years, though this is just speculation at this stage. I think there may be a charge to get her name removed from the mortgage but have not looked into this as I don't need it done yet.

I am not sure if your age will be an issue - she was 48 when she took out the mortgage with me and is working til retirement but they still gave us a 35 year mortgage even though she won't be working for 35 years (and they were basing affordability on us making the payments together).

Debt_Free_Chick

I think there might be tax implications as you will effectively own part of her property. So if she sells, you could be liable to capital gains tax on your share of any gain.

It might be simpler to raise a mortgage on your own property and then lend her that amount. You will probably need advice on this to minimise the risk of the loan being treated as a gift and then potentially liable to inheritance tax. Any repayment of capital by her should not have tax implications but I think that if you charge her interest, then that is probably classed as income for tax purposes.

I'm not sure how you envisage the annual review working. Would she be remortgaging her share to buy you out? This would only work if her income rises sufficiently to enable her to increase her repayments.

Hang around for other more knowledgeable MSEers ... these are my initial thoughts "off the top of my head".

Good luck

margaretclare

There are 'retirement mortgages' around i.e. lenders who deal with this part of the market and don't expect it all paid off by retirement age as some do.

Aunty Margaret

AndrewSmith

There is of course the option of standing as Guarantor for your daughter.

Andy

wigginsmum

My mother stands as guarantor for my sister; my sister makes all the payments but at the time she took out the mortgage was not earning much as a care assistant.

thetope

I am in exactly the same position as Badgergal - my mother holds a joint mortgage with me but she is an entirely "silent partner". I would never have been able to afford a mortgage on my own, but with my mother's salary backing me up at the time there were no problems with lending us the money. I then got a lodger to make it manageable for me to pay the mortgage by myself. Now, 3.5 years on i am in a financial position that i would probably be able to buy her out, but at the moment there is no real need. We are still both happy with the arrangement (she also gets a little bit of money back from me a month to pay back the original amount she helped me out with for the deposit/solicitors fees/stamp duty).

We set up a joint bank account for the mortgage payments and i just have a standing order from my own bank account that goes into the joint account every month.

Re capital gains tax, unless the property goes up massively in value, i do not see this as being a problem as it will be the daughters primary residence and you will both have an non taxable allowance.

Debt_Free_Chick

thetope wrote:

Re capital gains tax, unless the property goes up massively in value, i do not see this as being a problem as it will be the daughters primary residence and you will both have an non taxable allowance.

Agreed - but my comment re CGT was in relation to the parents' situation. Both parents would need to be joint owners with the daughter in order to get the benefit of the annual CGT allowance each - currently, £8.5k I think.

Badgergal

AndrewSmith wrote:

There is of course the option of standing as Guarantor for your daughter.

Andy

For some reason I couldn't get a guarantor mortgage despite Scottish Widows enticing me into their graduate guarantor mortgage - they pulled out at the last minute for some reason - very irritating and now it's on my credit file which isn't great. But a joint one (at another place) was easy.

Interesting to see someone else in same position thetope - have never met anyone else doing this and people are often shocked that I own my own home in London at my age considering I work in a low paid industry, so I find myself explaining time and time again...

AndrewSmith

Scottish Widows are fairly strict on their criterior for a guarantor (just placed one with them).

Must be a parent of the applicant, earning over £30,000 pa in Salary, and all loans etc taken into account.

I wouldn't be overly concerned about that one application being on your credit file.

Also the situation where a parent is joint owner of a property is a much more common practice that many people think.

Andy

Badgergal

Ah that would be why then - my mum didn't earn £30000. Would have been nice of the person to tell me before I'd gone through all the rigmarole etc!