Can I buy share of parents house?

Jemmajane · 7 July 2017 at 8:51PM

As a first time buyer can I get a mortgage to buy a share of my parents house?
I want to do this to get onto the ladder and also free up a lump sum for my parents to buy a smaller property for them to live in. I will then be living in their current house.
Thanks

Lilla_D · 7 July 2017 at 10:10PM

If you'd like to release equity from the property, there are a number of ways to go about it, but they may not be what you have in mind.
- you could remortgage with capital raising with you and your parents all on the mortgage and the deeds - watch out for mortgage term restriction due to your parents' age, although a few lenders can ignore their age, if their incomes are not used
- further to one of the posts a few weeks' ago, there is one lender who would allow you being on the mortgage, but your parents also being on the deed (i.e. owners without being on the mortgage)

Would your parents need a mortgage for the new house? If so, then they'd have to demonstrate that they could afford the mortgage on the current house and on the new house just by themselves without you.

If your parents are owners of both properties, then both properties being resi homes will mean that they'll have to pay the higher rate stamp duty on the new house.

In other words, you can't just buy a share with a mortgage on your own without the impact described above.

As an alternative, you could buy the whole property at a discounted price and lenders could give up to 100% of the discounted price as a mortgage (subject to T&Cs). However, this has obvious consequences as well. E.g. equity is gifted to you, so what about any siblings you may have, inheritance, etc. However, with this method your parents wouldn't be tied to the planned mortgage and wouldn't have to pay higher stamp duty on the new house. Now, there will be many people saying that family and money shouldn't mix, so this is just to mention another option as well.