buying house with my mother- some questions

jo70mo

My husband and i are buying a house and will extend it to make a granny flat.
we are getting a mortgage of 107,000 and will put down 38,500 equity. my mum will put in 45,000 and will want her share formalised in the deeds. solicitor said just me and husband should go on title of deeds as mortgage in our names and then info about my mum owning a share should go on the next page if that makes sense. will this affect getting a mortgage and do we tell the lender?
Ps the money for extending will be separate to this equation and come from th sale of my mums flat which is currently on the market.
thanks
jo

*EssEncE*

Your mum could go down on the deeds as having financial interest in the property, be that the normal way lenders do, ie holding a legal charge over the property. Your mortgage company will always require first legal charge over a property, hence your mum would be 2nd legal charge. But I'm sure theres another way to add her on the deeds by a restriction of some sort, noting her interest financially, but speak with a solicitor regarding this, they will advise on the best way forward.

As far as notifying your mortgage lender im not so sure. During your transaction your solicitor not only acts for you, they act in the interest of the lender too. Having a 3rd party financial interest in the property could possibly affect the lenders decision in accepting your mortgage. It's a tricky one. Maybe add your mum on later down the line to avoid any complication in your current transaction.

But there again your lender has first charge, so they get first cut on the monies in the event of repossession/sale etc. So what ever equity remains will be then be used to pay your mum and so on. Hence your mum taking the risk in that there wont be sufficient equity to pay her £45k.

Your solicitor is right in that you and your husband will have to be named on the title deeds as Proprietors, ie owners, hence mirroring your mortgage.

CFC

I don't understand why your solicitor is saying not to put her name on the deeds, quite honestly. Any multiple of people can own a house, these days three or four friends are clubbing together to buy one and they all go on the deeds....

mightymouse

Hi jo70mo

The Building Society would want to know about all adults living in the property.

How old is your mum and does she want a share in the property or just to lend the money with / without the property as security?.

*EssEncE*

For all I know it maybe possible for the OP's mother could go on the deeds under the Proprietors register, ie legal owner, but like previously mentioned they would need some link to the mortgage, ie binging her to the agreement. But that isn't required and would cause too much hassle, hence the lender would outright reject the mortgage offer. Think of the risk element.

I see the best course of action in your scenario would be for your mother to have noted (through her own solicitor) an 'Equitable Interest' and for that matter to be registered as a covenant to maintain its long-term validity.

But again, consult your solicitor and ask your mum to do the same.

If you notify your lender that your mum will be occupying the property, then yes, they will require her to sign an 'Occupiers Consent Form'. Once signed it basically removes the Squatters Rights of the occupier, hence making it easy to evict your mum in the event of repossession.