Parents lending deposit for 2nd house payback loan via rent?

ickle1999

I am currently looking to buy a second house.

I have been looking at the possibility of getting a Let To Buy (LTB) mortgage and rent my current house as per normal and get a 2nd mortgage for the remainder of the price of the new house.

However, there is a possibility that my parents will rent my 1st property from me and they will sell their house in order to be close to us and their grandchildren – also as they are getting older we can look after them should anything happen as they are much closer.

Due to this there is a possibility that they may be able to lend me the money (£150K) that I was intending to raise from a LTB mortgage. Therefore, instead of paying them back £1K per month I would just not charge them any rent to pay back the loan to them (I could always pay them and then they pay me back if required).

I would like to know if this scenario is possible and what would be required to make this legit and above board (laws, Tax etc..) or is it just much better/easier to get a LTB mortgage

Thanks in advance
Ickle

Thrugelmir

Why don't you just sell them your property?

ickle1999

I do not want to sell my 1st house as I want to keep this as an investment and give it to my daughter when she grows up

Cheeky_Monkey

On the face of it, it would seem like a win-win situation for you - not so sure about your parents though!

May I ask if you are an only child?

amcluesent

I can't understand what you're trying to do. I suggest you need an accountant to look at the tax position for you all and an lawyer to draw up wills, so there won't be problems from deaths.

Thrugelmir

ickle1999 wrote: »

I do not want to sell my 1st house as I want to keep this as an investment and give it to my daughter when she grows up

Mixing family and business rarely works. Best to decide your primary objective first.

G_M

You'll be a landlord so I assume you'll be aware of all the info in this post, and in the links within it..?

In particular, consider the point:

And don't let to friends or family - only to people you will be willing to evict if you have to, and losing whose friendship you are not concerned about

Of course, everyone's circumstances differ, but it is a point to consider carefully.

My main concern is actually for mum and dad. They are selling their home and moving to rented.
They are giving away (lending) their capital from that sale.
They end up very financially vulnerable!

It is possible you/they are considering this to reduce their savings/capital so that if/when they need residential care they will get it from the state/local authoriy as they 'now have no property/savings'.... just a guess? If so, this is unlikely to work due to the rules on 'deprivation of assets' (google it).

Thrugelmir

Cheeky_Monkey wrote: »

On the face of it, it would seem like a win-win situation for you - not so sure about your parents though!

Echoes my thoughts.