"Lending" son money for deposit

stoker48

I am "lending" my son £50,000 for deposit for his first house.

He is currently single but I've been told that should he get a partner in the future and they subsequently split up, she could have a claim on his house.

I'm advised that I should draft out a simple document stating that I am loaning him 50K and want it back when the house is sold. This doc should be witnessed but no need to go to solicitor. Whether I ask for the money back when he eventually sells is another matter but doing this safeguards him against possible claims by a partner.

Has anyone ever done this? Would welcome any advice.
THanks

clutton_2

you may find that lenders will want a papertrail as to where this £50k belonging to a very young person has come from. they may want a declaration from you that it is a gift.

if he can buy - you could ask you solicitor to put a charge on the property in your name - so that legally it is there for your protection - you dont have to exercise it if you dont want to - but it would stop a money-grabber girlfriend trying to steal "your" contribution

blunt_crayon

not sure if this will be of interest but there is a new type of mortgage that you can get with lloyd's tsb where you lend a deposit via a savings account but it stays in your name so you still have control over the money - you just can't access it for a fixed period (3.5 years). you also receive interest on the money during this time. after that your son can remortgage to make up the deposit and you get your savings back, if you want - i guess you might be able to carry on using them as a deposit, you'd have to ask them. the rate is good - 4.39%.
http://www.lloydstsb.com/mortgages/lend_a_hand.asp

Pee

This is the case. The problem isn't usually with a cohabitee, unless she was making direct contributions to the mortgage or he told her he was holding the house for both of them at a dinner party - yes, there is case law on that one - but I would suggest the protection of the interest at the Land registry would stop him making all silly mistakes like putting the house into the girlfriends name. If a girlfriend moves in, get them to draw up a cohabitation agreement stating clearly she is paying for bills and will have no interest in the property. If they get married, the courts split the assets as they see fit but only those belonging to the couple, notr a loan from the father.
For IHT purposes, if your estate is over the IHT threshold consider gifting the loaned amount to him formally over seven years before you die.

pawpurrs

If your not wanting the deposit back, then the best thing to do would be just to set up a declaration of trust that states that the 50k belongs to your son, and should he get a partner that he would get the deposit back, in the event that the house is sold, and that the partner has no right over it. I did this when I bought my first house with my then boyfriend now hubby.

Debt_Free_Chick

stoker48 wrote: »

I'm advised that I should draft out a simple document stating that I am loaning him 50K and want it back when the house is sold. This doc should be witnessed but no need to go to solicitor.

Irrespective of what you've been "advised", are you really comfortable with the idea of lending £50k on the back of a fagpacket, with potential problems when your son finds a shag-partner, without paying a couple hundred quid for professional advice?

Just curious ......

ronaldmacdonald

Debt_Free_Chick wrote: »

..when your son finds a shag-partner..

I am sure the original poster's son is honourable and doesn't have "shag-partners" as you so eloquently put it. "Girlfriend" would have sufficed

theartfullodger

I am sure the original poster's son is honourable and doesn't have "shag-partners" as you so eloquently put it. "Girlfriend" would have sufficed

Mind you, when he's worth£50k plus and has is own house his ability to attract S-P's may increase... And surely "Girlfriend" would be presumptive/restrictive: We don't know the son's interests...


If I were feeling (IMHO barking daft enough to consider..) like bunging any son of mine £50k .. I think I'd ask for a check-up at the Hospital, (probably not surgical or heart wards either)..

Cheers!

Lodger

vicstick86

someone mentioned setting a charge on the property.....I was told by my FA this is a really bad idea... as if they bank get a sniff that a charge has been set they wont give a mortgage as it would be too high risk!!!
Also if the bank is made aware of this 50k as a loan they will reduce the amount that your son can borrow.

My dad "gifted" me and my boyfriend the deposit for our house in good faith, with no legal agreement and he decided it was a risk he was taking as a father.

Trollfever

For a £50,000 transaction I would be paying for independent professional legal advice.

Thrugelmir

Trollfever wrote: »

For a £50,000 transaction I would be paying for independent professional legal advice.

Absolutely. There are various complications and situations that could could arise that need to be covered properly.

As you lending the money. I assume that you require repayment at some time. How is this to be effected?