Taking a large loan against a gifted house?

crystal1330

Hi,

So after talking on this forum and to my accountant, it seems getting a mortgage and buying my partners parents house is going to take at least two years because of the usual Directors issue.

So my question is, if his parents gift him the house, whilst we still have our savings (which would have been a deposit of 100k), then once hes legally owned the property for about 6 months he applies to borrow 50% of the property value of 200k, would this be possible?

Our plan would then be to pay his parents the loan value of 200k, transfer our 100k cash deposit and be indebted to them for 100k, which we would have been taking the mortgage out anyway.

The plan was to re-pay them 100k once we have developed and sold the property (partner is a developer).

I am wondering if it would be easier to get the money against the house once we legally own it, rather than BEFORE we own it?

His financial status at the time he applies for this loan against the house would be 4k per month salary but from a company who he used to own but no longer does and mine of 2k per month.

Annisele

I think the first problem is that the parents aren't actually gifting the house.

In theory yes, you can raise a mortgage secured on a house that's been gifted to you - but lenders are still going to want to be satisfied you can afford it. If you have problems demonstrating income now (because of director issues or anything else), then you'd still have problems demonstrating income if somebody gave a house to you.

OP's other thread gives more details - I think they're trying to achieve the same result with this gift scenario as they are with the purchase scenario on the other thread.

Yorkie1

I haven't read the other thread, but this seems fraught with potential for future difficulties. Your plan presumes that there will be no obstacles in the future stages of getting loans, repaying parents, owing parents etc. If only one of those stages goes a little pear-shaped, you end up owing the parents more than bargained for and for a longer period than they bargained for. If they needed the money quicker than you can realise it, you're in trouble. If anything goes wrong with the business, the house is an asset which might be at risk - and thus the parents' investment - to creditors.