But to let for son to live in

Annisele

16confused wrote: »

We have come up with two possible options

1. I take his deposit and my savings and then use this for a deposit on a buy to let in my name. The cash each month will come into my account and will be taken by the lender. They would never know that I was letting it to my son.

You'll not manage that without committing mortgage fraud.

The lender will want to know where the deposit comes from. Your son will not be an acceptable source (especially if he'll be living in the property). So, to get the mortgage in your own name (i.e. not joint names with him) you'd have to lie to the lender.

Also, most BTL mortgages prohibit letting to close family.

2. I lend/give the funds to my son who buys a property on a buy to let.
My understanding is that as a landlord he would need to show that the rent covers 125-130% of the mortgage cost. We have had a good look locally and know what the local rental market is and think that if we fixed the interest rate for 2-3 years we could demonstrate that the rent would cover the repayments by the required percentage.


The difficult bit is that my son would then rent this to himself. The lender would have a big deposit and security over the house. Despite this I'm sure they wouldn't want him letting to himself.

Lenders aren't stupid! They know some FTBs who don't qualify for normal residential mortgages try to buy on a BTL basis instead. Many (not all) BTL lenders require you to already own a property, and many (again not all) require you to be earning a minimum of £25k or so.

I think it would be much easier for your son to get a residential mortgage than a BTL. If he can't get a residential mortgage - even after speaking to a broker - then I don't fancy his chances of a BTL.

Pixie5740

Why does anyone need to commit mortgage fraud, breach the T&C of the mortgage and quite possibly commit LHA fraud too. Can't the son just rent somewhere, from a landlord he isn't related to, like many other people who aren't in a position to buy?

moneyistooshorttomention

Bluebirdman_of_Alcathays wrote: »

Much easier than the contrived arrangements suggested is surely to... Find a full time job?

Guess you missed the bit in OP's post that explains how he is trying to do so....:cool:....but they are few and far between in the area.

Good luck OP with working this out. Mossfarr's suggestion might be a possibility. Not an easy situation to be in - and your son's house deposit is at risk until things are sorted out one way or another (ie that part of the deposit over and above £6k). There is currently no provision for ringfencing house deposit money and making it plain that it isn't "savings" - its "house deposit". It just gets counted as being savings - even though it isn't iyswim.

NB; One point I would add is that - just to add an extra complication (sorry...) there is the element of "What happens re inheritance - should you die before all this is safely sorted in the conventional fashion?" I would imagine you are young enough this is unlikely and it sounds as if you don't have any other children (ie the question of fairness between them needing to be taken into account) - but "accidents do happen" and none of us can tell for sure when our Will is going to "come into play".

haras_nosirrah

I work as a broker for a large Intermediary and we are not allowed by our compliance to do btl mortgages for anyone who does not own another property even if the lender will do it or who we suspect may not be commercially letting.

This is why.

haras_nosirrah

Only way around it i can think of is for you to remortgage your own property in your name to provide the cash to buy your sons house outright

That stops the issue of his not having a job and not being able to pay firmly on your shoulders not the banks.

No bank will lend money to someone with no income or without a steady income to ensure repayment. That is the facts of the matter and to lie to get around this is fraud.

Bluebirdman_of_Alcathays

moneyistooshorttomention wrote: »

Guess you missed the bit in OP's post that explains how he is trying to do so....:cool:....but they are few and far between in the area.

No, I didn't miss that at all. I merely suggested that rather than try and hoodwink vendor, lender, EA, broker, solicitor, and probably commit fraud on the way, it would probably be better to use those efforts to find a job. Occam's razor and all that.

theartfullodger

haras_nosirrah wrote: »

....No bank will lend money to someone with no income or without a steady income to ensure repayment. That is the facts of the matter and to lie to get around this is fraud.

- at the moment:

They used to.. that's a big part of what triggered the banking crisis, 2008. It will come back, as greedy borrowers & greedy banks collude... Then it will all go wrong again... then there will be another clampdown....

moneyistooshorttomention

But then - the DWP will (basically) pay mortgage interest if OP's son becomes unemployed (with all the cuts involved in that these days - ie of not paying for first x weeks, for amount borrowed over certain amount, etc, etc, etc). Which would be instead of them paying housing benefit to cover rent and, quite likely, not cost them any more.

.....and then there is insurance one can take in case of job loss.

We can only assume OP's son is a responsible sort of person and handles his finances well (probably the case - in view of the level of deposit he has saved - despite uncertain job history). Unfortunately there aren't a lot of ways of telling who is responsible and will make sure things go okay and who isn't (ie the liar loans pre-2008).

Some people "push it to the limit" (of which I was one in my time) and we really are responsible and things work out as per our plans (even if "summat unexpected" gets thrown into the mix - in my case those interest rates shooting up in the 1980s). Others "push it to the limit" but are unrealistic in their assessment of their capabilities. We have no way of knowing which category OP's son comes in of those two - hence I'm assuming he is in the responsible category.

csgohan4

moneyistooshorttomention wrote: »

But then - the DWP will (basically) pay mortgage interest if OP's son becomes unemployed (with all the cuts involved in that these days - ie of not paying for first x weeks, for amount borrowed over certain amount, etc, etc, etc). Which would be instead of them paying housing benefit to cover rent and, quite likely, not cost them any more.

.....and then there is insurance one can take in case of job loss.

We can only assume OP's son is a responsible sort of person and handles his finances well (probably the case - in view of the level of deposit he has saved - despite uncertain job history). Unfortunately there aren't a lot of ways of telling who is responsible and will make sure things go okay and who isn't (ie the liar loans pre-2008).

Some people "push it to the limit" (of which I was one in my time) and we really are responsible and things work out as per our plans (even if "summat unexpected" gets thrown into the mix - in my case those interest rates shooting up in the 1980s). Others "push it to the limit" but are unrealistic in their assessment of their capabilities. We have no way of knowing which category OP's son comes in of those two - hence I'm assuming he is in the responsible category.

You lost me there??? what is the point of your post?

Person_one

moneyistooshorttomention wrote: »

But then - the DWP will (basically) pay mortgage interest if OP's son becomes unemployed

Not if he's renting they won't, and claiming housing benefit would likely be fraudulent.

SMI will have a waiting period of 39 weeks before 1st payment from next month.