Mortgage through parents?

shaggyeightyfive

I am currently looking to buy a flat in London, initially to rent out but with the intention of living in it in a couple of years. I am currently living abroad, earning a decent amount tax free with accomodation paid for.. In the UK, my earning potential is substantially lower. I work for a small company but I feel the business is sound. I have been working for them for 6 months but am happy to stay in this job for a couple of years.

I had a conversation with a mortgage broker who thought there would not be any issues giving me a mortage based on a 53% LTV. My parents have a current account mortgage and have offered to lend me money for the flat through that. This seems like a good idea as it would allow overpayments and the rate is slightly lower. The plan would then be to overpay the mortgage by a large amount per month, so that on return to the uk I have a completely affordable mortgage and will buy my parents out as soon as possible. I would be confident of my ability to make repayments on this mortgage from money earned in the UK should I have to return earlier than planned. What are the downfalls with this plan and what can best be done to protect their investment / avoid any tax liability

Wh05apk

If they can fund the property through their mortgage at a lower rate, it would make sense to do it that way, in effect they would loan you the required amount, the property would be in your name, so they would have no CGT liability, they could protect their interest by placing a charge over the property, on your return, you could then remortgage the property to repay them.

Potential issues are:
IHT liability ?
They will be responsible for the mortgage, even though it is for you.