Getting a BTL but putting the flat in son's name? Possible?

krishijones

We have a mortgage for the property we are living. My son studies in Scotland and we want to buy a second flat for him to live in. He'll be sharing with 2 other mates, who'd be paying certain sum, hence helping with the mortage.

We have realise we have to take a BTL mortgage for this, even though my son will be living on it.

I want to make my son the main owner of the property, so he can avoid the HMO issues (by being a resident-landlord renting 2 other people). The mortgage provider would look at my details (earning, credit ratings etc) for the BTL mortgage...in this case, how can I get him as the main owner of the property...like the landlord? is this possible? :mad:

any help would be great, thanks :-)

Thrugelmir

As the owner then your son would require a residential mortgage as it would be his home.

krishijones

Thrugelmir wrote: »

As the owner then your son would require a residential mortgage as it would be his home.

He's a student with no earnings, so he cant get any mortgage on his name. But apparently i can get a mortgage and he could be the landlord somehow, I just dont know how I go about this. I've been reading about its possibilites and wanted to know from the experts here. Any idea? Thanks :-)

mrginge

If the son owns the property, what asset is the mortgage lenders loan secured against?

jennifernil

Could you get a guarantor mortgage?

Your son will own the property, you will be the guarantor. His pals will therefore be lodgers.

The amount he can borrow would depend on your income. If you already have a mortgage, that will limit what he could borrow.

We did this for our daughter.

If that doesn't work for you then there is no alternative to a BTL mortgage with you as owner.

jennifernil

BTW.....owner plus 2 lodgers can mean he needs to comply with HMO regs in certain areas of Scotland.

I would check with the local council first.

(We are in Glasgow)

kingstreet

Buy the property jointly with him as a second property for family occupation. You can then use a residential mortgage product and not have the hassle of a regulated BTL.

If you don't have the personal income to do that, you'll have to entertain the BTL route and need the 25% deposit, rent to exceed 125% of monthly mortgage interest at 6% etc.

sammyjammy

You'll be putting your son in the position where he has to deal with any landlord type issues, is he happy with that? We've seen instances on here when it all goes very wrong where one student in the house owns/is owned by their parents.

holly_hobby

Gtor mge - your Son will need to be employed with income, so thats out at the minute.

So 2 options ...

You pch with a BTL mortgage (that permits student lets). As there will be 2 other non-related individuals resident in addition to Son (meaning his occupancy share is less than 40%), you do not have to source a regulated arrangement (despite the family connection). Affordability will be based on rental income/mge interest with 125% headroom reqd.

You are liable to declare and pay tax on the rental income.

Second option, you AND son pch together as joint applicants and mortgagors on a straight residential mge.

Affordability and max term will be based on your income (you go 1st/main applcant, he goes 2nd), and your age (75 yrs old is the typical max redemption age).

As owner occupier, he can rent out the rooms the lodgers, and you will achieve tax benefits under the rent a room scheme -subject to rent and qualification (check if this applies to Scotland). Also don't forget any rental income is assumed as being jointly recd and divided, but as you are not-married indviduals, you only need to make clear representation in documental recorded data/format, as to whom the income goes and therefore is liable to any tax (for HMRC purposes should they req confirmation of the split).

When he has graduated and working (and subject to status), you may apply for a transfer of equity if reqd (ie remove you and leave him as the sole owner).

Other than the above, I feel you're snookered I'm afraid.

Hope this helps

Holly

krishijones

jennifernil wrote: »

Could you get a guarantor mortgage?

Your son will own the property, you will be the guarantor. His pals will therefore be lodgers.

The amount he can borrow would depend on your income. If you already have a mortgage, that will limit what he could borrow.

We did this for our daughter.

If that doesn't work for you then there is no alternative to a BTL mortgage with you as owner.

jennifernil wrote: »

BTW.....owner plus 2 lodgers can mean he needs to comply with HMO regs in certain areas of Scotland.

I would check with the local council first.

(We are in Glasgow)

Hi, my son's in Glasgow as well. We looked for Scotland HMO situation and it says "Landlord plus 2 lodgers = no HMO", so we should be fine with that.

About the guarantor mortgage, which one did you use for your daughter? And my son is at uni so has no income, so will he still get the guarantor mortgage?

Also, I've PM'd you about Glasgow if thats ok :-)