We’d like to remind Forumites to please avoid political debate on the Forum.
This is to keep it a safe and useful space for MoneySaving discussions. Threads that are – or become – political in nature may be removed in line with the Forum’s rules. Thank you for your understanding.
PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!
Charge against a property as a percentage rather than absolute number
commonsensebrother
Posts: 21 Forumite
We're planning to lend our in-laws approx 25% of the purchase price of a property (the other 75% covered by them) with a charge against the property to secure our loan. Is it possible for that charge to be a percentage of the property price (25%) rather than absolute number (e.g. £60,000)? Secondary to that would be be possible to have an agreement where interest is accrued as a percentage of property value, e.g. 1% per year to be redeemed on house sale (I understand tax would be payable on this interest when the house is sold).
Waiting to hear back from our property solicitor but was just curious if anyone had any experience of anything like this.
Waiting to hear back from our property solicitor but was just curious if anyone had any experience of anything like this.
0
Comments
-
Are your in-laws also needing a mortgage or is their 75% cash? If there is a mortgage, your charge will always be secondary to the bank ( assume that the bank permits the second charge).
You also seem to want to take the gain of the property price twice, as interest and as a percentage of gain when sold. Might be easier if you owned 25% of the property.2 -
Grumpy_chap said:Are your in-laws also needing a mortgage or is their 75% cash? If there is a mortgage, your charge will always be secondary to the bank ( assume that the bank permits the second charge).
You also seem to want to take the gain of the property price twice, as interest and as a percentage of gain when sold. Might be easier if you owned 25% of the property.Their 75% will be cash from the sale of their house.Don’t want to ‘own’ 25% because then we’ll have to pay second home stamp duty.
Not trying to gain twice.0 -
Then just be happy with the £ charge.commonsensebrother said:Not trying to gain twice.
If you go %age, and the value drops, will you be happy to take the dip?2 -
Had a % deal on ex's property after one of my divorces.0
-
I may have misunderstood, but I do read the thread that the OP is looking to "double-dip"
OP does not want to own part of the property, to avoid tax
OP want to loan 25% of the property price and benefit from the gain (or loss) when the property is sold.
OP also want interest at 1% of the property value per year when the property is sold. Calculation of what that 1% means each year will be difficult.0 -
The OP isn’t really sure what they want. There seem to be lots of options and I was just curious to whether this was possible.Grumpy_chap said:I may have misunderstood, but I do read the thread that the OP is looking to "double-dip"
OP does not want to own part of the property, to avoid tax
OP want to loan 25% of the property price and benefit from the gain (or loss) when the property is sold.
OP also want interest at 1% of the property value per year when the property is sold. Calculation of what that 1% means each year will be difficult.I see what you mean about the ‘double dipping’ I hadn’t really thought about that. That isn’t really the intention and maybe the interest is entirely unnecessary.
I do definitely want to avoid the second home stamp duty If it can be reasonably and legally be avoided though.0 -
It is both reasonable and legal to offer a private mortgage, which this is, therefore without incurring any extra stamp duty. But I'm afraid I don't know whether it can be done on a percentage basis. Please come back and let us know when you get your advice from your solicitor, who can also draw up the necessary agreements.commonsensebrother said:
I do definitely want to avoid the second home stamp duty If it can be reasonably and legally be avoided though.0 -
I believe the only way to do this as a percentage is to have the occupiers make a will leaving you that percentage. A lot of what you are doing is based on trust. A mortgage lender would probably not lend if there is a third party.My Username is tongue in cheek. Not meant to offend I promise….0
-
Nonsense (also, poor inheritance tax planning!) - it's perfectly possible to lend on the basis that the borrower repays a share of the eventual value of the property.Not4turning said:I believe the only way to do this as a percentage is to have the occupiers make a will leaving you that percentage.
2 -
Even a will can be revised when them-wot-will-die meets toy-boy or mistress (or both! )0
Confirm your email address to Create Threads and Reply
Categories
- All Categories
- 352K Banking & Borrowing
- 253.5K Reduce Debt & Boost Income
- 454.2K Spending & Discounts
- 245K Work, Benefits & Business
- 600.6K Mortgages, Homes & Bills
- 177.4K Life & Family
- 258.8K Travel & Transport
- 1.5M Hobbies & Leisure
- 16.2K Discuss & Feedback
- 37.6K Read-Only Boards