Purchase Property From Grandparents

deb5376

Any advice on this would be appreciated.
My grandparents have asked if I would like to purchase their property from them as a way of me getting on the property ladder. They are proposing to offer the property at less than market value, for which I would obtain a mortgage. They will continue to live at the bungalow.

What are the possible down points on me doing this - financially. I talk more of in the future when I am in a position to sell the house. Will the tax man want to claim a slice as the property was bought below market price.

Are there any legal avenues I should explore for a purchase of this nature?

Any general advice people can offer what be valuable.

On the reverse - If this were to happen and my granparents are effectivly given a cash lump sum by me, will this penalize them financially . Will they loose any benefits they receive and will the tax man be knocking.

Nothing agreed but rough figures -
Property value - approx 110k based in Lincolnshire
Proposed sell price - £ 60k

Many Thanks In Advance

MortgageMamma

Hi

This is called family gifted equity and lots of lenders accept this, therefore you will not need a deposit. Your grandparents will need independent legal representation (a different solicitor from yours) and will have everything explained to them they will also sign a declaration to state they are doing this of their own free will

with regards to the mortgage, there are quite a few lenders who will entertain family gifted equity particularly if you intend to live in the property but as this is not a straightforward transaction I would urge you to seek professional mortgage advice

MM

herbiesjp

The transaction under value is not a problem.

However they could be classed as making a gift with reservation i.e selling the property but still keeping the benefit of the property. You will need proper legal advise on this as you would not want to get clobbered for Inheritance Tax further down the line. Them paying you a market rate of rent could be one way around it

The other problem you have is that they will still be living there, but you would not be living there. So you would need a BTL mortgage (and a regulated one, seeing as you are renting to family)

This scenario has a few complexities which you would be best advised going to a broker and tax adviser to go through

HTH

deb5376

Thankyou both so much for your help and advise
Much appreciated