Mortgage/loan from a family member - advice needed

M.A.

Not sure if this is the right place but maybe someone could give me some pointers. Is it possible to buy a property from a family member and get a mortgage or loan from them for the transaction? Assuming the family member does not have any loan on the property and the money owed to them would be paid back at an agreed interest rate?

Any ideas or info would be greatly appreciated!

roswell

whats wrong with a normal mortgage from a bank / mortgage provider.

lotto-dreamer

You will need to speak to a solicitor about preparing the mortgage deed and you would both usually have to have your own solicitors.

M.A.

roswell wrote:

whats wrong with a normal mortgage from a bank / mortgage provider.

No lenders arrangment costs, no deposit to put down and interest would be at a low rate.

MortgageMamma

You can get a normal mortgage in this instance with no arrangement fee's without a deposit at a reasonable rate, all you would have to pay is legal fee's and any stamp duty due.

M.A.

MortgageMamma wrote:

You can get a normal mortgage in this instance with no arrangement fee's without a deposit at a reasonable rate, all you would have to pay is legal fee's and any stamp duty due.

What about if the property was rented out straight away?

roswell

If your going to rent it out you need a Buy to let mortgage,

To make it easier why dont you tell us what your trying to do and then im sure someone can advise the best way to do it.

M.A.

roswell wrote:

If your going to rent it out you need a Buy to let mortgage,

To make it easier why dont you tell us what your trying to do and then im sure someone can advise the best way to do it.

Thanks Roswell. Family member has a property with no mortgage and mentioned would I like to buy it. They are not bothered if I rented it out, which is what I would want to do. I have no funds as a deposit (I know I would have stamp duty to pay, survey costs for piece of mind and legal costs) so the loan scenario came up which would be at a low rate, it seems quite attractive to me. I really wanted to know if it is legal to do this, how difficult to set up and would it be advisable to enter into such a relationship with a family member? I don't mean just from my viewpoint but from theirs too.

lotto-dreamer

From a legal point of view

....."There is no specific reason not to take a mortgage on a private basis but it is a good idea to get everything laid out properly and take legal advice on how it would work" etc ......see this link below (slightly different scenario but it might help what you are looking at doing)

http://www.telegraph.co.uk/money/main.jhtml?menuId=244&menuItemId=8932&view=DISPLAYCONTENT&grid=A1&targetRule=1

M.A.

lotto-dreamer wrote:

From a legal point of view

....."There is no specific reason not to take a mortgage on a private basis but it is a good idea to get everything laid out properly and take legal advice on how it would work" etc ......see this link below (slightly different scenario but it might help what you are looking at doing)

http://www.telegraph.co.uk/money/main.jhtml?menuId=244&menuItemId=8932&view=DISPLAYCONTENT&grid=A1&targetRule=1

Thanks. Did not think what would happen if the family member dies. Need to speak to a solicitor!

MortgageMamma

If you are going to let this out it might be better to formally mortgage it, as you will be taxed on your rental income as investment income. The mortgage payments can be offset against your tax. there are only a handful of lenders who would do a family gifted equity buy to let without a cash deposit, if you choose to take this route you would be wise to take advice from a mortgage broker