Help me please :)

RichardTheComic

Hi all, racking my brains to try to work out whats best..
.
My long term partner (7+ years) don't live together. Work has us living in different ends of the country. I own my house (£112 mortgage against a value of £175K), on a very low BRT +0.75%. My partner lives in rented accommodation (ridiculously cheap rent £180 per month). My partner has been given notice to quit, so needs somewhere to live. I resent the thought of him paying ludicrous rent (£500 pcm +), and he's interested in buying, but has a little credit card debt, and access to no deposit. I've got around £15K in savings + in theory could borrow against my home to fund.

We've seen a flat that's perfect (location, but needs work). I'm wondering what's the best option for purchase….

(1) Give him the deposit he needs to raise a mortgage himself (though, and I hate myself for saying this, if anything ever went wrong, how do I get it back?)
(2) Purchase the flat jointly (assuming a mortgage lender would allow me NOT to redeem my current mortgage, as I need it for my house) as tenants in common
(3) I purchase the flat on a BTL basis and 'rent' the flat to my partner (seems really mean).

There is a 4th option. The flat is being offered on a shared ownership basis (just 25% but the rent on the unowned share is a bit disproportionate at £225 pcm). Obviously as I'm a homeowner, this would just be in my partners name. The seller seems to prefer to sell it 100% which he can do as the housing association didn't find a buyer.

The flat is £76K (its in East Midlands on a nice small development built in 1990). The flat does require a little work - mainly decoration, but the kitchen ideally would be replaced.

Please be nice, I'm after friendly advice

Bossypants

If you were to give your partner the deposit, it would need to be an outright gift without strings, otherwise the lender is likely to baulk, which means that you wouldn't be able to get it back in the event that things went south (I assume here that you're not married or civil partners?).

I wonder if there is some way you could purchase the flat as a BTL yourself on an interest-only mortgage and rent it to him, but then keep the rent he gives you less the interest aside and gift that sum to him at a later date to use as a part of a deposit (I assume he would be saving up as well at the same time, to clear his debt and add to the overall sum he'd have), either to buy this flat off you or another one? That would allow you to help your partner while still keeping your lump sum, so you wouldn't be making money but you wouldn't be losing it, either.

RichardTheComic

Thanks for the reply BP. That does seem like the fairest way of doing it. I don't want to profit from my partner - that's certainly not the intention. But likewise, I don't want to regret any decision I make further down the line. Can you still get BTL on interest only? I thought that interest only mortgages were completely phased out. Also, last question, I promise - when I looked the BTL mortgages seemed to have hideous product fees (like £1999 upwards).

Bossypants

Yes you still can, but only for BTLs. I saw a broker in February to make sure, as that's what I'll most likely need at some point in the coming 12 months, and there were a couple with quite fair fees and decent rates (the one that worked best for my hypothetical scenario was with Leeds BS I believe?).

RichardTheComic

Just looked at Leeds BS - not bad rates - good feesaver deal on 70% LTV (which is a little more deposit than what I'd have).

RichardTheComic

Whilst very grateful to bossypants, I wonder if any other kind forumites had a view...