Will DMP affect family member's credit rating?

sunnyskies2

Hi, OH and I are now on a DMP and credit rating has gone down - no defaults yet showing but they are on the way - that's expected.

We are in discussions with son to either:

1) We sell up and become mortgage free and put the cash into a new joint purchase with son (we will be mortgage free), he will have a mortgage and then pay him rent.

Or

2) We port mortgage into a new joint mortgage with son.

I imagine option 1, should not affect his credit rating as we are not financially linked - only on the Deeds and I'm guessing (from reading another thread) that if we went for option 2 his credit rating would be affected negatively by association with us.

We don't want to get involved in something that could have a negative impact on him financially in the future.

Any advice information would be gratefully received.

Thanks

Thrugelmir

If you are in a DMP then option 2 is not an option.

Will you be be settling any debts if you pursue option 1?

The deposit will create a financial association.

sunnyskies2

Hi

Yes, if we sell we will clear all other debts too. Would the financial association be detrimental for son? He doesn't live with us.

Thanks

HappyMJ

sunnyskies2 wrote: »

Hi

Yes, if we sell we will clear all other debts too. Would the financial association be detrimental for son? He doesn't live with us.

Thanks

The full liability of the mortgage payments by him would be detrimental to his affordability...

Thrugelmir

sunnyskies2 wrote: »

Yes, if we sell we will clear all other debts too. Would the financial association be detrimental for son? He doesn't live with us.

The issue of you living in a property where the deposit is provided by yourselves and the mortgage is raised by another family member, will create complexities. Which mainstream lenders may well decline the application on.

Also it's not as simple as rent = mortgage. As the income (profit made from letting) will be assessed for tax in the hands of your son.

sunnyskies2

It wouldn't be a basic deposit - we would be putting down 50 - 75% and he may well be living with us - would that change anything for the better?

Thrugelmir

sunnyskies2 wrote: »

It wouldn't be a basic deposit - we would be putting down 50 - 75% and he may well be living with us - would that change anything for the better?

If you are not named on the mortgage then issues still arise. As you have a vested financial interest in the property. Which overrides the lenders security in certain situations.