Remortgage to release equity for this reason ?

densol_2

In 2017 I want to remortgage to release funds
I'll approach a broker nearer the time but initially wondered if this borrowing was the type they lend on ?

dimbo61

You might well find it difficult to get a lender to lend on this.
Your kids are not taxpayers and it is a gifted deposit from the bank of mum and dad.
First time buyers as well with no history of being a Landlord.
Might be an idea to build up savings rather than overpay.

AnotherJoe

I think you can do it but in two steps.
First remortgage to release money for a BTL, buy it yourself.
Once done, then gift the property to children.
Only downside is, will cost you more due to extra SDLT and legal fees.

My questions are,
Can you buy a property in greater London for £250k ?
Why Greater London?
Do your children wish to become landlords?
Would they manage the property or would you?
Might you be better to buy two or three properties elsewhere than London (where it's substantially cheaper) to spread the risk?
Might you be better to look at alternative investments instead, which require less handholding? For example invest in property related investments as a substitute for actual bricks and mortar. Or a mix of both and then say 3 years down the line, review. A smaller property outside London, and the rest investments.

densol_2

AnotherJoe wrote: »

I think you can do it but in two steps.
First remortgage to release money for a BTL, buy it yourself.
Once done, then gift the property to children.
Only downside is, will cost you more due to extra SDLT and legal fees.

My questions are,
Can you buy a property in greater London for £250k ?
Why Greater London?
Do your children wish to become landlords?
Would they manage the property or would you?
Might you be better to buy two or three properties elsewhere than London (where it's substantially cheaper) to spread the risk?
Might you be better to look at alternative investments instead, which require less handholding? For example invest in property related investments as a substitute for actual bricks and mortar. Or a mix of both and then say 3 years down the line, review. A smaller property outside London, and the rest investments.

Hi - thanks for the reply. I dont want to buy in my name as 3% plus stamp duty and also delays IHT planning. Kids already have £30k plus savings each so will be adding them in if necessary. I live in Greater London so managing easier and in my comfort zone. Plus prices continue to go up. Ive had properties since 1984 and general trend is up.

We chatted last night - it may be they live in the property instead - just a few ideas changling around.

dimbo61

This is one for a broker.
You have £100K plus and can add what £2,500 each month.
The kids can add another £60,000 so well on way to £250,000
Now there maybe a way to buy between all 3/4 of you Mum+Dad plus kids on deeds and mortgage to either live in or rent out.
You need expert advice re 3% stamp duty and Tax.
Kids may want there own place and being named on a BTL could effect that and second home purchase in years to come ( thanks Mr Osbourne )

densol_2

dimbo61 wrote: »

This is one for a broker.
You have £100K plus and can add what £2,500 each month.
The kids can add another £60,000 so well on way to £250,000
Now there maybe a way to buy between all 3/4 of you Mum+Dad plus kids on deeds and mortgage to either live in or rent out.
You need expert advice re 3% stamp duty and Tax.
Kids may want there own place and being named on a BTL could effect that and second home purchase in years to come ( thanks Mr Osbourne )

Cheers for thoughts

Its only me - Im a single mum. If I get a job the savings can increase to £4500 a month. I live frugally - I hardly spend money. The reason I want a bigger mortgage and gift it to sons - is to minimise IHT - as at the moment without future IHT planning a big wack will go to HMRC as its just my allowance. Id rather give it to them now.

This is being done as a medium term investment whilst kids are at Uni. Once they graduate and get jobs they can sell the house and split the proceeds when they want to buy their own places.

csgohan4

densol wrote: »

Cheers for thoughts

Its only me - Im a single mum. If I get a job the savings can increase to £4500 a month. I live frugally - I hardly spend money. The reason I want a bigger mortgage and gift it to sons - is to minimise IHT - as at the moment without future IHT planning a big wack will go to HMRC as its just my allowance. Id rather give it to them now.

This is being done as a medium term investment whilst kids are at Uni. Once they graduate and get jobs they can sell the house and split the proceeds when they want to buy their own places.

Have you split your house into tenants in common?

JimmyTheWig

csgohan4 wrote: »

Have you split your house into tenants in common?

With who? She's a single mum.

tea-bag

densol wrote: »

In 2017 I want to remortgage to release funds so I can buy my 2 kids an investment property in greater London. I will gift them the money. They can keep the property as long as they want. Hopefully it will increase in value and they can have an income from the net rent. Neither will be tax payers at that time.

My house is worth approx £800k - will owe about £230k next year ( I'm overpaying £500 pm ) so maybe less. I could overpay by £2500 each month - but I'm not minded to put all my extra monthly income into overpaying the mortgage.

I have about £100k in savings at the moment and want to release maybe £150K+

I receive a tax free injury benefit of £60k per year and I'll hopefully get a job paying £32k at the end of this year ( that's the max my pension scheme allow me to earn ). My injury benefit ( which is the equivalent of earning before tax around £92k) is payable for life so I'll always be able to pay my mortgage. I have no debts / credit cards and excellent credit rating.

I'll approach a broker nearer the time but initially wondered if this borrowing was the type they lend on ?

Is this on top of all the benefits you claim to be claiming????

densol_2

tea-bag wrote: »

Is this on top of all the benefits you claim to be claiming????

The ESA and IIDB are deducted £1 for £1 as I cant get the money twice for the same injury. Even if I didnt claim but were entitled ( as I am ) they would deduct a " notional " amount off anyway. The PIP is not means tested or linked so not deducted.

Bet you thought you caught me out then lol !

amnblog

JimmyTheWig wrote: »

With who? She's a single mum.

Well spotted Jimmy