Investing in someone else's property

Glastoun

This is hypothetical for now, but I'm curious about whether the scenario below would work.

Ignoring the fact that a property value could go up or down, if I put in some money into a friend's/family member's property to help them buy, maybe 5-20% of the value of the property, what would be the pros and cons of this for each party? How would it work, would I have a 20% stake on the deeds but no involvement in the mortgage? Would this situation affect the other party's likelihood of getting a mortgage, or inhibit them in some other way? If the other party fell into arrears or defaulted and the property was repossessed, would the 20% come back to me or is there a potential that it could be lost?

Like I said, this is hypothetical (not least because I don't have any money to do this at the moment ) but I'm curious whether this would be a way of investing in property without going down the buy-to-let route which could deprive a buyer-occupier the chance of buying a property to live in.

davidmcn

Pretty much impossible to do it if there's a mortgage involved (as the lender will expect their borrower to be the sole owner and to be contributing all of the deposit from their own resources).

eddddy

Glastoun wrote: »

if I put in some money into a friend's/family member's property to help them buy, maybe 5-20% of the value of the property...

As davidmcn says, you can't do this with a conventional mortgage.

But one or two lenders are offering 'family offset mortgages' or 'family springboard mortgages'.

Essentially, they are offset mortgages, but your savings account can be used to offset a family member's mortgage, to increase their 'borrowing power'.

(I should add that I haven't looked at them in any detail, and I don't know anyone that's got one - so I don't know how good or bad they are.)

marksoton

An absolute mess of finances where no one wins.

Don't even try it.