joint mortgage, mother/ daughter

hodsocks

My wife and daughter are taking out a joint mortgage to buy a house. The agreement is that my daughter takes out the mortgage and my wife and I live there and pay the bulk of the mortgage effectively as rent. A joint mortgage has been considered to avoid my daughter having to pay tax on the rent income. The mortgage is based on my daughters income with my wife considered as having no income.
My wife's concern is what are her/our rights should the relationship breakdown or something happens to my daughter?

Mojisola

Have you looked at whether you can actually get a mortgage for this scenario?

hodsocks

Yep, one has been applied for and provisionally agreed by the bank

Thrugelmir

If your wife has no income then she would be regarded as a dependent of your daughter for mortgage purposes. You would have to declare your own occupancy of the property, and in the process sign a declaration that you have no financial interest in the property.

The obvious flaw is that if you are unable to meet the mortgage repayments etc, Then is your daughter in a position to fund the entire cost.

Does your daughter intend to purchase a property for her own occupancy?

CLAPTON

why are they/you doing this?

does the daughter already have her own property?
is she married?

hodsocks

Reason for daughter buying a property at the moment is that she currently works in London and has no chance of buying a property there. She is buying a property here to get a foot on the ladder and also help her old folks with some long term security in a property.
Some time in the future she may want to buy a property of her own to live in, advise from out mortgage advisor suggests that shouldn't be a problem.

hodsocks

I think my wife's biggest concern is if my daughter gets married and something happens to her will her future spouse be able to sell the house without her permission, even though she is a joint mortgagee,

Mojisola

I'm surprised she can get a mortgage for a house she isn't going to live in while you, not on the mortgage, will be living in it.

If your daughter married and then died and left her share of the house to her husband, then he could try to force a sale but would have to go to court first. While that was going on, you would probably be expected to pay rent to him for the percentage of the house that he would own.

Thrugelmir

hodsocks wrote: »

I think my wife's biggest concern is if my daughter gets married and something happens to her will her future spouse be able to sell the house without her permission, even though she is a joint mortgagee,

Spouse has no right to sell an asset that he doesn't legally own.

Thrugelmir

hodsocks wrote: »

Reason for daughter buying a property at the moment is that she currently works in London and has no chance of buying a property there. She is buying a property here to get a foot on the ladder and also help her old folks with some long term security in a property.

Lenders will question this.

Mojisola

hodsocks wrote: »

I think my wife's biggest concern is if my daughter gets married and something happens to her will her future spouse be able to sell the house without her permission, even though she is a joint mortgagee,

Thrugelmir wrote: »

Spouse has no right to sell an asset that he doesn't legally own.

I took that to mean what would happen if the daughter died and the son-in-law inherited the daughter's part of the house.