Daughter Buying Me A House: Pitfalls? Advice?

Annisele

seven-day-weekend wrote: »

I still don't see why, if they have given her the money,t is not her money (when we gave our son the deposit for his flat it became his money, in his bank account), but I will bow to superior knowledge.

The problem is that the OP wants to live in his daughter's house.

So, let's pretend the daughter stops paying the mortgage. The bank wants to repossess the house. The parents say "but we have a claim on this house - some of the money used to buy it came from us, so you can't evict us". Bank has seriously problems repossessing (and may not be able to repossess at all) - so bank doesn't want to lend the money in the first place.

If your son had stopped paying his mortgage, you wouldn't have been able to claim a beneficial interest in the house. If you had, the bank would have said "tough, you gave your son a gift, he chose to buy a house with it but that's nothing to do with you". In OP's case, the house does have to do with the parents, and it's clearly linked to the gift - hence all the "gift with reservation" comments.

Is that any clearer?

holly_hobby

Please don't take my post as anything negative to you (it isn't), as if you don't work within the mge or FS arena you wouldn't be aware of the issues, and your post WAS designed to help - so thats actually a thanks from me for having a go ! x

The deposit issue in this case is a tad more complicated that your kind gift to your Son, which was a straight forward donation.

Hope this helps

Holly

seven-day-weekend

Yes thanks that is clearer.

seven-day-weekend

holly_hobby wrote: »

Please don't take my post as anything negative to you (it isn't), as if you don't work within the mge or FS arena you wouldn't be aware of the issues, and your post WAS designed to help - so thats actually a thanks from me for having a go ! x

The deposit issue in this case is a tad more complicated that your kind gift to your Son, which was a straight forward donation.

Hope this helps

Holly

Thanks for explaining.

holly_hobby

Annisele wrote: »

The problem is that the OP wants to live in his daughter's house.

So, let's pretend the daughter stops paying the mortgage. The bank wants to repossess the house. The parents say "but we have a claim on this house - some of the money used to buy it came from us, so you can't evict us". Bank has seriously problems repossessing (and may not be able to repossess at all) - so bank doesn't want to lend the money in the first place.

If your son had stopped paying his mortgage, you wouldn't have been able to claim a beneficial interest in the house. If you had, the bank would have said "tough, you gave your son a gift, he chose to buy a house with it but that's nothing to do with you". In OP's case, the house does have to do with the parents, and it's clearly linked to the gift - hence all the "gift with reservation" comments.

Is that any clearer?

Couldn't have said it better myself .... thanks Anni. x

H x

WoodruffsDad

This has got very complicated and I'm getting conflicting advice from this forum and from several financial advisers whom I've contacted.

Time is running out as we MUST move out of our present home by the end of April at the latest. My wife's employer will help us find somewhere else to live but it will be a rented property and we won't have much choice in where we end up!

Let's look at the facts again:

I will be 70 in May 2013 and my wife will be 63 in March 2013. We do not own any property and we have about £25k to spend. My daughter, aged 32, who currently does not own any property is more than happy to take out a mortgage in her own name whilst my wife and I live in the property and pay the deposit and the repayments until we "cease to exist"!

What avenues are open to us?

Even decent park homes cost more than £25k!

Yorkie1

We are going round in circles here. The comments on this forum are not going to change.

In order to avoid mortgage fraud, your daughter will have to declare a) that the deposit money came from you; and b) that you will be living in the property.

She will be unable to get a residential mortgage because she is not living in the property.

She is unlikely to get a BTL mortgage because a) she is not currently a property owner; and b) you will be living there - making it a regulated BTL which is a rare thing.

If you have got formal advice elsewhere that you can pull the wool over the lender's eyes about either the source of the deposit or your residential status, then fine - go with them. They have professional indemnity insurance.

But we can't be much more clearer on here about the issues as we see them.

You want it to be straightforward, but it isn't and no amount of repeating the question will make it so.

Have you investigated the social housing aspect?

Good luck.

holly_hobby

To be honest Wood. its not complicated at all, and if you had recd any differing advice to that given here, to put it quite simply, its wrong or they don't know the full facts of what you intend to do. (and I say that as a qualified financial and mortgage advisor)

However the fact you are back here asking for more ideas, does suggest that the info given by the majority of the 3rd parties you have also floated this by, have provided the same findings as here on MSE.

If you provide any monetary contribution to facilitate a mortgage for a property that you will effectively be resident in - and even if you are paying rent under a regulated BTL - you monetary contributions depicts beneficial ownership and a gift with reservation (ie you are only providing the capital to the mortgagor in direct exchange for your residency in the property).

No lender will accept this .... now the lender, upon discovering the deposit is "gifted", may well ask that you sign a gift disclaimer form, meaning that you sign away all rights to the cpaital injection, but once they find out that the donor (you) will actually be resident in the same property post completion, any mge offer will be withdrawn.

As suggested, I would explore the rental market as the current plans you have aren't going to fly (unless as prev stated fraudulent info is provided as part of the application and conveyencing process).

Hope this helps

Holly

kidmugsy

The solution is easy. Get your daughter to change her name by deed poll to Peter Mandelson. The laws on mortgage fraud don't apply to him.

WoodruffsDad

Thank you all for your very useful advice.

The law, in this case, is an !!!!

Why shouldn't I, as a parent, fund my daughter's house purchase but live in it for, say, 15 years until I peg out thus leaving her with some solid capital in bricks and mortar?

I would be more than happy to declare the situation fully to anyone who might need to know (HMRC etc.)

I appreciate that I have to give up my plan but it makes me quite angry that meddling bureaucrats can stop me from spending my hard-earned money exactly how I want to.

Grrrrrrrrrrrrrrr!