Can I remortgage my house and lend the money to my son to buy a house

interceptor02

I cannot seem to find a definite answer to these question.
I am not sure if this legal however I will ask the question!

Can I remortgage my property and lend the money to my son for a depoist on a house?

I am looking to borrow 20K over 15 years. My house is worth about 200K.

getmore4less

YOu can borrow whatever you like


Sons lender will not be too happy with a large loan for a deposit.

interceptor02

All the lenders we have contacts want a least a 15% depoist before even considering him for a mortgage. hence the 20K.

kingstreet

You can remortgage your house to raise a sum which you gift to your son for him to use as a deposit to purchase a property. He's unlikely to be able to get a mortgage if you lend him the money.

interceptor02

yep thats what I want to do "gift" him the money. Do I tell the remortgage company of my plans?

kingstreet

There will be a question on the application form which asks "purpose of loan" or something similar. Deposit for second home or something similar is perfectly acceptable. The only purposes lenders tend to frown on is tax payment or business start-up.

When your son applies for a mortgage, he will enter his source of deposit as "parental gift" and you will probably be asked to confirm in writing to the lender that the payment is a gift and is not a loan or repayable in any way.

interceptor02

Thanks for the info. Although I own my own home. I have not looked at mortgages since I brought my house 20 years ago! So I am new to this again. When brought this house I only needed a 5% depoist. When I went to the Mortgage advisor yesterday. He said no lender would touch my son with 5% depoist they all want a least 15% for a first time buyer. He hasnt got 15% only 5%. So the only way is for me to lend him the money.

getmore4less

interceptor02 wrote: »

Thanks for the info. Although I own my own home. I have not looked at mortgages since I brought my house 20 years ago! So I am new to this again. When brought this house I only needed a 5% depoist. When I went to the Mortgage advisor yesterday. He said no lender would touch my son with 5% depoist they all want a least 15% for a first time buyer. He hasnt got 15% only 5%. So the only way is for me to lend him the money.

You have to make it a unconditional gift why do you keep saying lend?

kingstreet

So the only way is for me to lend him the money

You mean gift him the money?

Damn you GM4L! Beat me to it.

interceptor02

Sorry. meant gift him the money. I have got lend on the brain!!
Anything else I should be aware of?

cumbria_mortgages

I don't think there is anything else it is pretty straightforward, I have done this many times for people, just make sure your re mortgage is done in time to give your son the money he needs for his deposit.