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What is this called? If I give someone a house deposit for a % of the house?
Legacy_user
Posts: 0 Newbie
I think I've thought of a good idea for both parties.
I know a lot of people are struggling to buy because they don't have a deposit. What if I give them a deposit but get say 25% of the house. This is good for both parties as I will get a return on my money and the buyer doesn't have to spend thousands in rent that they will never get back, they can get on the property ladder!
I know a lot of people are struggling to buy because they don't have a deposit. What if I give them a deposit but get say 25% of the house. This is good for both parties as I will get a return on my money and the buyer doesn't have to spend thousands in rent that they will never get back, they can get on the property ladder!
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You would own a % of the house. It's called co-ownership. You would own what ever % as tenants in common.0
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berbastrike wrote: »I think I've thought of a good idea for both parties.
I know a lot of people are struggling to buy because they don't have a deposit. What if I give them a deposit but get say 25% of the house. This is good for both parties as I will get a return on my money and the buyer doesn't have to spend thousands in rent that they will never get back, they can get on the property ladder!
mortgage companies tend to have a major problem with third parties having an interest in the properties.0 -
You would own a % of the house. It's called co-ownership. You would own what ever % as tenants in common.
Or it could be called a mortgage, and if you offer the loan on a commercial basis you're likely to need a Consumer Credit Licence. It's only a good idea if you have enough money to effectively start your own bank.0 -
You don't necessarily have to jointly own the house. If you trust the person sufficiently, then you could lend it outside of the ownership, with no security, at an interest rate that you could even contractually tie to the future value of the property. They, in effect, have a peer-to-peer personal loan which they then use for the deposit. No charge against the property, nothing (much) for the mortgage company to get excited about.0
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You don't necessarily have to jointly own the house. If you trust the person sufficiently, then you could lend it outside of the ownership, with no security, at an interest rate that you could even contractually tie to the future value of the property. They, in effect, have a peer-to-peer personal loan which they then use for the deposit. No charge against the property, nothing (much) for the mortgage company to get excited about.
And nothing to ensure you get a penny of your money back.
The OP is proposing this as a business venture - ie lending to strangers.Trying to be a man is a waste of a woman0 -
notanewuser wrote: »And nothing to ensure you get a penny of your money back.
Y'see the sentence that says "If you trust the person sufficiently..."?The OP is proposing this as a business venture - ie lending to strangers.
I read it as a personal loan to a friend or family member, rather than a stranger through a business relationship. If it's as a commercial venture, then the OP really needs to be on the phone to the FCA immediately, because they've got an awful lot of paperwork in their near future.0 -
Y'see the sentence that says "If you trust the person sufficiently..."?
Yeah. Nobody has ever been stung by somebody they trust...........I read it as a personal loan to a friend or family member, rather than a stranger through a business relationship. If it's as a commercial venture, then the OP really needs to be on the phone to the FCA immediately, because they've got an awful lot of paperwork in their near future.
If that were the case the following sentence would read "I know a lot of people that are struggling..."berbastrike wrote: »
I know a lot of people are struggling to buy because they don't have a deposit.Trying to be a man is a waste of a woman0 -
This idea is a non-starter really because finding a lender that will agree to someone lending a deposit will not be acceptable, and they will not like you having an interest in the property but not being party to the mortgage.0
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Presumably you want a return on all that money you have tied up, ie some interest? If not you are just taking a gamble on capital appreciation, and the other party gets the benefit of your money free of charge.
If you want to lend money to strangers there are peer to peer lending sites that do it. The "safer" loans give you around 5-7% gross of tax.
You can lend to house buyers and BTL buyers through peer to peer lending and get up to 13% a year. See http://www.telegraph.co.uk/finance/personalfinance/investing/10765079/You-can-earn-13pc-they-say-but-is-it-safe.html
Not one for me.0 -
Why limit it to 25% of the purchase price? Why not 100% of the purchase price? You could loan it out for a long period of time (say 25 years) and charge a rate of interest of c.3-5%. Put a charge over the property until the loan is paid off, and you've got some security in case they do a runner.
I can't believe no-one's thought of this before....0
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