Buying a house in instalments?

Hollio

We’re currently renting my parents property but I wish to buy it off them, it’s value is around £300k but I can only reach a mortgage of £140k (partners credit score is bad so I will have to get mortgage alone). Partner buys and builds building plots so we we will make £20-£50k per plot.

Can I give them £140k with mortgage, then pay them in “instalments” for the rest of the value once we have lump sums up from building plots.

Any tax/legal implications involved? Or problems with getting a mortgage for less than the value? Would the ownership have to be put in my name?

Thank you.

davidmcn

I doubt mortgage lenders will be happy to lend you £140k if at the same time you're effectively borrowing £160k from your parents.

Also bear in mind (if the mortgage is in your sole name) that your partner's business income isn't your income. What if he just decides to keep it?

eddddy

To keep the mortgage lender happy, you'd probably find that the remaining £160k has to be a gift from your parents - and they'd have to sign docs to confirm that.


But if your parent gave you a £160k gift, there'd be nothing to stop you giving your parents gifts totalling £160k over the next few years.

But obviously, it would be voluntary on your part. If you decided not to give your parents any gifts, there'd be nothing they could do about it.


(A gift vs a loan would also have very different consequences if you went bankrupt, or got divorced etc.)

SmashedAvacado

You're basically describing shared ownership and staircasing. In theory you could structure something along these lines in a private deal, but the legal complication around it is probably going to make it unworkable for you. And your lender will hate it.

G_M

Time for a chat with an independant mortgage broker.