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Helping a family member purchase property
cardiff_blue
Posts: 23 Forumite
My Brother in law is looking to buy his first property,and I am looking at ways in which I can help out. He will be living in the property with his family, and has no deposit.
He would be looking to get a 50% mortgage on the property and i was thinking of ways of helping out with the other 50%. I have approx 25% of the property value in cash available and plenty of equity in my own property.
what is the best way of doing this? is there a way of me helping him out with the other 50% without putting down any of my cash?
any advice would be gratefully appreciated it.
He would be looking to get a 50% mortgage on the property and i was thinking of ways of helping out with the other 50%. I have approx 25% of the property value in cash available and plenty of equity in my own property.
what is the best way of doing this? is there a way of me helping him out with the other 50% without putting down any of my cash?
any advice would be gratefully appreciated it.
0
Comments
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You would remortgage your property to release some of the equity and use that to put down as the deposit?
The issue will come when your brother in law applies for the mortgage. The lender will ask where the deposit is coming from, if its from someone else and anything other than a gift (without reservation), its going to cause problems.I am a Mortgage AdviserYou should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.0 -
yeah I think that is the only option really, would it be possible for me to say own half of the property somehow if i did this?0
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No, as the mortgage lender will insist upon you signing a gift disclaimer form, basically stating that you are making the donation without any requirement of repayment or in exchange for any interest in the property.
You could jointly buy with him, you providing the deposit (effect a trust deed re this aspect of the purchase monies), mortgage treated under 2nd property regs, whilst you will both be assessed on affordability (inc all existing commitments) and status. As this isn't your primary residence, you'll be exposed to a CGT assessment on sale or transfer of your ownership - so may not be ideal, but will secure your legal ownership rights until sale or he is in a position to effectively buy you out (he may have SDLT exposure if the effective mortgage transfer/buy out exceeds nil rate SDLT threshold of 125k.
There are other options, but I won't muddy the waters, speak to an independent whole of market broker.
Hope this helps
Holly0
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