Parents Help with mortgage

Hardlife91

Hi everyone,

I am going for my first house soon and my mum has offered to help me in 1 of 2 ways...

1. Lend me a 20% deposit that I will pay her back next year (no interest on the loan).

2. Buy the property outright and I pay her so much a month back over 15 years (until she retires as its her retirement fund).

I want my mum to come out of this with the best finances possible. She has a total of 100k.

Would she be better off saving it (I do not know what interest rates) or loaning me the money (with interest)?

Any help would be much appreciated!!

Kind regards,

Matt

leveller2911

Don't take your mother up on her offer ,unless you/she has a crystal ball then no one knows what the next few years will bring.

Save up the deposit yourself.....

Good luck Matt.

Hardlife91

I do have enough for a 10% deposit myself. She was going to make it up to 20%

leveller2911

Would she be financially comfortable if for instance redundancy/ill health etc became an issue?... If she bought the property for you and you paid her back monthly and she needed to claim benefits this could possibly be an issue.

Is your job safe?......If she helped with your deposit and you failed to keep up the payments then its possible you could lose her money as well as your own.

Lots to think about Matt but its just my opinion.

Hardlife91

My and my partners income is secure.

My mums house is paid for and she has a working partner that can support her if you took ill.

opinions4u

Lloyds TSB Lend A Hand mortgage may be the answer.

http://www.lloydstsb.com/mortgages/offers/lend-a-hand.asp

Mum gets her money back with interest in 42 months.

comeandgo

I think you mum would have to declare to HMRC if she is making interest on loans.

Yorkie1

If you apply for a standard residential mortgage (i.e. one which isn't explicitly designed like the lend a hand one), then you will need to declare the source of your deposit.

Lenders usually don't like a deposit to be a loan, which your first proposal amounts to. If you said that the loan was actually a gift, then both you and your mum would have to sign documents to that effect - which would be mortgage fraud if the intention is otherwise.

As regards your second proposal, your mum is risking an awful lot if your financial situation changes for the worse and you cannot afford to maintain the repayments.