Registering a deposit as a formal loan

Habib2342

Hello,

My mother recently held a buy to let which she sold in feb 2016 and pocketed about £112k from it.

The intention now is to use this as a deposit for my brother's place.
He recently got married abroad and is in the process of bringing his wife over.

How do we go about ringfencing the deposit so that it remains with my mother's control in the event of relationship breakdwon adn they have to sell up ? I've read that we can register the deposit as a formal loan so that the money is repaid to her if the worse was to happen ( god forbid ) after the mortgage is repaid.

Many thanks,

Habib Hussain.

AnotherJoe

Get the solicitor managing the purchase to create a separate agreement where the conditions of the loan are clearly set out.
When I did this, the agreement is no repayments needed (this is crucial since no lender will allow this anyway) and then the conditions when the loan may be repaid. Typically upon sale of the house.
You can also get a second charge put upon the house so that they cannot just sell the house and run off with the deposit money.
Not all lenders will allow this so you may need to hunt around or get a broker. Santander did for ours. The upside is very good mortgage rate as low LTV.
Your mother will probably also need to sign an agreement stating she will not be living in the house.

AdrianC

Get the solicitor to register the loan as a charge with the LR. If there's a mortgage, then that'll be the first charge, this would have to be a second.

Keep_pedalling

I think it highly unlikely that any lender would provide a mortgage under those terms, because in effect he would be buying the house entirely on borrowed money.

Sometimes you have to let go and trust people not to mess their lives up, but if they do then it is not really your problem any more. We provided both our children with their first house deposit as out and out gifts, to not do so would have given the impression that we had little faith in their judgment.

AnotherJoe

Keep_pedalling wrote: »

I think it highly unlikely that any lender would provide a mortgage under those terms, because in effect he would be buying the house entirely on borrowed money.

You think wrong. I did exactly this 18 months ago.

Habib2342

'Sometimes you have to let go and trust people not to mess their lives up, but if they do then it is not really your problem any more. We provided both our children with their first house deposit as out and out gifts, to not do so would have given the impression that we had little faith in their judgment.'

Agreed but my brother has just recovered ( or just recovered as best can be ) from a long mental illness. My mother would have no hesitation in giving him the money to buy his place but given his past and history , she is not so sure. Plus she ( as well as I ) have doubts about his wife's relations as they kicked up a fuss when we were abroad for the marraige over six ounces of gold.

I am pretty sure she, if not her clan, will raise hell if the relationship sours. Unfortunately our father passed a long time ago so he is not here to oversee things. I'm only interested in safeguarding my brother's asset whatever the future holds for him.