Can a family member take out a mortgage for me?

Penguin6666

Hi,

My credit is shot and I’m struggling to get a mortgage. A family member who has no interest of ever being on a property ladder has offered to take the mortgage out in her name, and in 2 years time I’ll transfer it into my name.

I know there are many risks here such as they will be liable, we could fall-out and what not but is there anything we should be aware of that makes this a really bad idea?! I’m sure there is.

Credit is poor due to redundancy but financially I’m ok now.

AnotherJoe

You cannot "transfer" a mortgage. So that's one major thing be aware of!
The downside here is all on your friend, and there are multiple. They would be a landlord, so would need to pay tax, put in tax returns,comply witha raft of legislation, pay extra 3% SDLT if they already owna home, give up their future FTB benefits if hey don't (whatever their current attitude) and potentially pay CGT when they sold the house to you, assuming you can afford it then, which you don't know.
I suggest you wait until you have repaired your credit position and then buy in your own right.

ACG

Sooo many potential issues and expenses.
What happens if you fall out?
What happens if your friend passes away?
Who will do/pay for the accounts/income tax/stamp duty/solicitors/valuation etc?
Who will pay for work needed doing?
What happens if house prices drop and you can not get a mortgage in 2 years time?
What happens if house prices rise and your friend gets greedy?
Where is the deposit coming from? A gift from a friend who will be living in the property will not be possible.

What bad credit do you have?The market for adverse credit is quite good at the minute. You may be surprised. Speak to a broker with experience in bad credit.

csgohan4

Family and money should never mix.


If you can't afford to buy a house on your own two feet, consider doing so when your stronger and have a better credit history as owning a house comes with expenses which can be unexpected and costly, like a new boiler/roof

AnotherJoe

p.s. Add to the list of reasons why this is a terrible non-starter of an idea*, your friend would need to take out a BTL mortgage which means minimum of 25% depsoit and a interest rate 1% above residential. Then pay tax on the income.
So, to make this financially neutral for them, your "rent" would have to be at least as much as a ordinary LL would charge anyway plus all the numerous risks as above (including, if hosue prices fall, will you recompense friend? Could you even afford to?



* To steal a line from Blackadder;

This is the worst idea since someone said ‘ let’s take this suspiciously large wooden horse into Troy, statues are all the rage this season’

Penguin6666

Thank you for all the replies. I was kind of expecting those answers, but was seeing what options came along with it.

Will definitely hold out for a bit or look at adverse lending.

Thanks