Loaning my son money

MartynL

Well it was just a thought that initially(see first post) the rate I would get(2.5%) would be better than he could get anyway elsewhere. Sorry I don't understand all this. I thought 2% above the bank(base?) rate would be good but maybe in the longer term it wouldn't.

AMILLIONDOLLARS

What happens if he can't pay you back? There are no guarantees regarding employment these days, new job or not. (He may not pass the probationary period!) Will you be able to make the repayments if he can't? The bottom line, is that you are ultimately responsible until the loan is paid back.

AMD

MartynL

Yes I would pay it back, I'm not concerned about that side of things thanks.

getmore4less

MartynL wrote: »

Well it was just a thought that initially(see first post) the rate I would get(2.5%) would be better than he could get anyway elsewhere. Sorry I don't understand all this. I thought 2% above the bank(base?) rate would be good but maybe in the longer term it wouldn't.

In your fist post you sugested he would make the mortgage payment, that would include interest so potentialy taxable.

If he just paid you back the capital interest free and you paid the interest that would be OK.


With a LTV of around 50% and a £40k loan if he earns over about £15k I think he should be able to get a mortgage.

whats he earn?

JasX

why not buy 50% of the house in your name? he can then live in it... perhaps even paying you 'rent' for your half.

you'd be in a much securer position as rather than loaning him the money and relying on him being financially responsible you'd own £40,000 worth of bricks and mortar in your name

Money_mad_4

Thats really kind of you lending him the money. At least he wont have to go cap in hand to building societies, they can be aweful to deal with in the current climate.

Good luck with the wedding fund (the one getting married) make sure you pay your tax on your saving interest,lol x

ninky_2

i would say there are no tax issues since you are not benefiting from the interest as income - the bank / mortgage lender is.

as long as you trust each other, gift him the money and then he can 'gift' you money back for repayments.

MartynL

Well I am getting completely lost and confused. :undecided

Firstly I think he earns more than £15,000 pa. Secondly the other thing about borrowing as per my first post is that it would only be over 15 years as I am 59 now. I know part ownership would be good for me but i would rather not be involved in the property, it's for them. Btw they are married 4 years now.

Pincher I don't want to gift the money, it is a loan. I probably will need it later in life.

MartynL

ninky wrote: »

i would say there are no tax issues since you are not benefiting from the interest as income - the bank / mortgage lender is.

as long as you trust each other, gift him the money and then he can 'gift' you money back for repayments.

That's what I want to do but I don't want any tax implications by doing it that way. So I get the loan on my property at currently 2.5%. I give him it for his property in his name and he pays my payments direct(or through me if it helps) to the building society. What does that sound like because it seems early on in the thread that I would be liable for tax? The money would be his share of my property when I depart this world(i have 2 other sons)

ninky_2

MartynL wrote: »

What does that sound like because it seems early on in the thread that I would be liable for tax? The money would be his share of my property when I depart this world(i have 2 other sons)

i don't think they were taking into account the fact that the interest wasn't actually what you were charging but the cost of the loan from the mortgage lender. i'm not an accountant but i would have thought it was fine. relatives give money to each other all the time. you are not actually making any money from it and nor is he so nothing to do with the taxman as far as i can see.