Family mortgage support for young couple unable to get their own mortgage

Hemingway

Here's the scenario: Family provide a deposit to purchase house for young couple. Uncle + Aunt (approaching 60) apply for mortgage in Uncle + Aunt's names (therefore house title would be in Uncle + Aunt's names). Young couple pay back monthly cost of mortgage to Uncle + Aunt and later when established apply for own mortgage and effectively buy the house from Uncle + Aunt.
There are several questions which I do not have answers to and wondered if anyone had done something similar and could advise from experience. I think we could pass the income test but how long can we get the mortgage for. Would it have to be buy to let. I own and let 2 other properties could I re mortgage one of those or even my own house. Is there a tax liability as this could be income (although not a profit). Any other pitfalls and would mortgage providers be open to this kind of arrangement or should it be kept private.
I would be grateful for any advice. Thanks

Wh05apk

Who are you, the Aunt/Uncle, or nephew/niece?

CLAPTON

well

if the A&U own the property
- when they sell to the N&N then stamp duty would be payable by N&N
-captial gains tax would be payable by A&U on the gain (if applicable)

Income tax would be payable on the profit from renting

A&U could in principle get an ordinary mortgage on their own house but that would depend upon their income and age.
A BTL would be possible although some mortgage providers don't like letting to relatives but that wouldn't apply if you mortgaged an existing property

Hemingway

Wh05apk wrote: »

Who are you, the Aunt/Uncle, or nephew/niece?

The male half of the Aunt and Uncle.

Wh05apk

You are not really renting so could probably be done on a dependent relative basis, but the problem will probably be your age, as lenders don't like mortgages going beyond 70.

Do you really want the house in your name? the potential tax liability, and ultimately IHT issues could be a nightmare, could you not lend them the deposit, and protect yourself by putting a second charge in place?

Hemingway

Do you really want the house in your name? the potential tax liability, and ultimately IHT issues could be a nightmare, could you not lend them the deposit, and protect yourself by putting a second charge in place?[/QUOTE]

That's a good option. Thanks. I was also considering whether it is possible to act as a guarantor for the mortgage payments but it be in the names of the young people so they actually have title. Do you happen to know if this is practised by lenders. Thanks again.

Senior_Paper_Monitor

The are a number of 'bank of mum and dad' (which may extendable to Aunt/Uncle in at least some cases) structures which may workable in the circmstances you are describing - this is one to put to a whole of market broker with details of uncle/aunt/niece/nephew financial details so possible optiopns can be identified.

The CGT / IHT / IT issues raised by others are absolutely valid by the way (these, together with other practical issues, need to be consiudered carefully) - take professional advice.