Buy to let and deposit query

GMS

What sort of income do your parents have?

Do you have any income of your own? Could you get a mortgage assuming you had a deposit? If so then there are possible other options as mentioned earlier in the thread.

With all due respect you are seemingly not able to arrange this yourself so please do not try to piece together an understanding of the processes.

Speak to a broker. Unlikely to cost you anything for the initial chat.

There could well be a solution but it needs to be done properly.

kells1232002

My mum also has a £40,000 share in a property from inheritance. So another option would be to use this as a deposit and pay back this to them at low interest rather than getting a mortgage against their property? But I'm guessing this would mean tax implications also?

Simon_gloster

betmunch wrote: »

Simon,
I think its mum and dad raise £40k on their residential home.
Then they buy a BTL property which they rent to the OP.

So mum and dad will then have 2 mortgages and 2 properties.
Seems doable to me even with the regulated BTL product. Subject to parents retirement income

I think I'm starting to understand it betmunch!!!!

They key here is the intention to let it out to them or not. If not, I know some lenders allow 2nd homes if their siblings live there and can have residential rates.

holly_hobby

If there were any regulated BTL lenders in the market - this is completely do'able.

But I don't know of any current reg BTL providers (shout if you do !) - which is what is reqd for individuals to pch a property to rent to family (where more than 40% of the property is occupied by family). In this case the D (officially being the tenant) means the case will fall foul of the regulated requirement. And this is regardless as to if the family member (in this case D) pay rent or not, or there is an official AST in place or not.

Solution, could be a mge for a 2nd prop for dependant relative.

Or, a guarantor mge (subject to D's income and parents status being accepted, with they being happy to accept the legal implications that being a gtor requires).

If she is at UNI, there is another option.

Rental income - OP be aware your parents will be required to complete annual SA tax returns, even if no gain/tax is due on the rental inc received from you, and on disposal they would be fully exposed to CGT on any gain (subject to their annual CGT relief), so it would be helpful to have you on the deeds if possible (if you stack up credit history wise) to mitigate their exposure.

Hope this helps

Holly

kells1232002

Sooty what do you mean when you say

Solution, could be a mge for a 2nd prop for dependant relative.

holly_hobby

A mge for a property, that is neither being purchased as a holiday home, or a 2nd private residence of the applicant - but to house a relative which could be a child, parent etc.

In that case, the lender will be happy that a family member is in residence, and will proceed to check the status of the applicants in support of the required lending. (i.e credit history, income, age and max permiited term, etc)

Hope this helps explain (sorry I didn't explain term in my orig post)

Holly

Ps ... always preferred Sweep to Sooty ... x

betmunch

Holly, I wouldnt worry about the regulated BTL issue too much, I can think of one off the top of my head and I dont do a great deal of regulated BTL.

Think a good chunk of BTL lenders will allow family members as the tenant as long as they know from the start.

Kells - the suggestion is that your parents take a 2nd residential mortgage and buy the property for you to live in. Their income would have to cover both mortgages and you wouldnt pay any rent.

Most people would do it the way you suggested first with the BTL mortgage, but if your parents retired well enough it could be done as a second residential mortgage

holly_hobby

Thanks B - when you think of the official reg BTL provider could you let me know ? (PM me if you'd rather not publish on the board )

Re family member let - they must go through full affordabillity assessment with the applicants, in order to cover themselves from breaching FSA regs re lending unregulated products on a regulated basis. Unless of course they don't officially package and lend under BTL, but do so under a family mge arrangement.

Helpful to the OP if that is the case.

Holly

Thrugelmir

Kells1232002 if you can afford to service a £200k mortgage. Then this suggests is far more to this than meets the eye. Whatever the reason. (There's no need to publish more than you are comfortable with ). Then this may impact on the options available.

kells1232002

My partner was discharged bankrupt 2.5 years ago so don't think our chances would be great. We also have an extended family so need more space.

Mortgage brokers - what's the average interest rate on mortgages for discharged bankruptcys?