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helping parents buy a house
Ron45
Posts: 2 Newbie
My parents are old and renting, they want to buy a small flat and have a large deposit (50/60%) however cannot get a mortgage
I have a mortgage and am credit worthy for more. What are my tax implications. Can the flat be in their name with my personal guarantee and I get a normal mortgage
I have a mortgage and am credit worthy for more. What are my tax implications. Can the flat be in their name with my personal guarantee and I get a normal mortgage
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Comments
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For you to get a mortgage on their flat, you'd normally have to be a joint owner - and that would open their home to risk from your finances.
Is there scope for you to extend your own mortgage, and loan them the money raised, securing it by a charge against their flat?0 -
Why can they not get a mortgage? Age or financial status? One or two building societies offer mortgages to elderly people. Do some Duckduckgoing (or googling) or see an independant mortgage adviser.
Likewise, an adviser should be able to direct you to a lender who'd accept you as a guarantor.
If the mortgage is in your name, so must be the property. If you currently own you'll be liable for the 2nd home SDLT supplement. If you don't own already, you'll lose your FTB status and benefits.
As a non residential owner, you'll be liable for Capital Gains Tax when you sell.
Geting a mortgage in your name for a property you own will also present difficulties - you'll need btl mortgage, most of which prohibit letting to family.0 -
Your better off drawing equity out of your current property and gifting them the cash.0
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Your better off drawing equity out of your current property and gifting them the cash.
A loan (with charge against the property) would be better to protect the OP's position should his parents need care.0 -
Will their income be sufficient to pay a mortgage?
A normal mortgage will be no good for you if this flat is the security to be used. You can either remortgage your current property if you have sufficient equity and income but bear in mind if your parents cannot repay the mortgage you will have to. I am also not sure how any money given monthly by them to you will be treated tax wise but if it is viewed as rent you will be liable to tax on it. If it is a loan with a proper agreement you are best doing that through a solicitor maybe with a secured charge on the flat.I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
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Thanks everyone, yes they have a pension and can afford the mortgage, its the age, they are in mid sixties Thanks0
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There is at least one lender that will lend against a property you don't own.
There was a thread on here or the mortgage board covering the legalities but I can't find it, maybe one of the brokers can remember the details or find the thread.0 -
We are in a similar position, in our 70s and having investigated find that mortgage companies will only allow two incomes to count as income for the mortgage so my DW and DD will share ownership of the house.
DD lives with us and does not own any other property so no tax complications.0 -
https://www.money.co.uk/mortgages/mortgages-for-over-60s.htmThanks everyone, yes they have a pension and can afford the mortgage, its the age, they are in mid sixties Thanks0 -
Found the link I had been looking for
A lender that will let you borrow the money without being an owner on the mortgaged property.
https://forums.moneysavingexpert.com/discussion/5763258/can-i-go-on-the-deeds-but-not-on-the-mortgage
Remember that if you take out the loan and they pay you money that included the interest that interest is taxable.
They can bay back the loan without the interest.0
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