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Setting up a mortgage with the Bank Of Mum & Dad
incesticde
Posts: 466 Forumite
(Sorry if this question has been asked before...I did do a search)
My parents have offered me the chance to borrow 90k from them for my house purchase...this is on top of a 30K gift towards the deposit. I'm bringing in 40K.
They want to see a return of 3% per year on the mortgage amount, and I'm looking to finish the loan off in 10 years. I've worked the figures out and it all looks good. I can pay 12K a year to them no issues and this deal should save me at least 10K as opposed to getting a bank mortgage.
Obviously we need some sort of legal contract between us to protect my parents, is there anything else I need to consider? My parents will have to claim the interest as income? What are the other tax implications ? etc etc
My parents are not looking to profit from the house (other than seeing their son settled)
Thanks for your help
My parents have offered me the chance to borrow 90k from them for my house purchase...this is on top of a 30K gift towards the deposit. I'm bringing in 40K.
They want to see a return of 3% per year on the mortgage amount, and I'm looking to finish the loan off in 10 years. I've worked the figures out and it all looks good. I can pay 12K a year to them no issues and this deal should save me at least 10K as opposed to getting a bank mortgage.
Obviously we need some sort of legal contract between us to protect my parents, is there anything else I need to consider? My parents will have to claim the interest as income? What are the other tax implications ? etc etc
My parents are not looking to profit from the house (other than seeing their son settled)
Thanks for your help
"I don't want to sound cold and un-caring, but I am those things so that's the way it comes out" - Bill Hicks
0
Comments
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incesticde wrote: »My parents will have to claim the interest as income?
Yes they will have to declare it as income and pay tax.
This will impact their return.0
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