FTB with an interesting choice...

arpner

Hi all,
I have just had an offer accepted for £174K on a house and I need some advice on what to do next.

My Scenario is as follows:
I'm in the fortunate position where my Dad is giving my £94K as a deposit on the house which leaves me to get an £80k mortgage. My Dad has suggested that he will in effect pay for the new house in full and remortgage his own house to the tune of £80k as to avoid £80k of inheritance tax on it when he passes on. ( his house is worth a fair bit so that is def going to be an issue ) He has suggested an Interest-only Mortgage on his house for me to keep my monthly payments to a minimum and obviously when the ineveitable happens the cash generated from the sale of his house will pay the mortgage. ( and hopefully leave a bit more....!!)

My Dad is a pretty reasonable guy and we have an excellent relationship and even though this is his suggestion it is ultimetly up to me to decide what to do.

Obviously the other option is to get a repayment ( most likely) mortgage for the 80k on my new house but my repayments each month would be considerably higher.

I earn approx £19K and have no savings but no debt.

Any help much appreciated as all this is new to me and I'm having headaches getting my head round it all....!!!

homer_j_3

Will the property be in your name or his?

There are a few issues that may surround this if he is to gift you the cash as his death could then bring a tax liability

If the property remains in his name then he wont avoid IHT and will also be liable for Capital Gains Tax should he sell for any reason prior to his death.

There may be more issues as its a while since I did my FPC's so I am sure the IFA's can confirm or put me right. They are probably the right people to be talking to.

arpner

As far as I'm aware my Dads house is in his name at the moment, I'll have to check with him if its staying that way. My new house will be in my name whatever I decide to do.