Deed of trust

sarahjaneralph

Hi everyone
im trying to buy a house with my mum who is 75 but finding it impossible to get a mortgage with a deed or declaration of trust which is protecting mums cash share of the house - any thoughts or advice ? It should be so simple to jointly buy a house 

Thrugelmir

Could you provide some detail as to how the financial arrangement is being structured. Matters only become complex when people make it so. 

whosthatgirl1989

You can't protect her cash investment but her percentage of ownership I believe. The percent can be worked out by deposit added to split of mortgage payments divided by house purchase amount e.g. £20,000 + half of the mortgage £100,000 = £120,000 / £250,000 = 48% ownership. If she's not contributing to the mortgage she'd then own £20,000 / £250,000 = 8% for example.

Then when you sell, the house sale amount pays off the remaining mortgage and whatever is left is then split by your percentage of ownership.

That's what I understand anyway! I have a deed of trust with my partner and that's how we protected having different deposits. Hope that helps.

stormCat99

whosthatgirl1989 said:

You can't protect her cash investment but her percentage of ownership I believe. The percent can be worked out by deposit added to split of mortgage payments divided by house purchase amount e.g. £20,000 + half of the mortgage £100,000 = £120,000 / £250,000 = 48% ownership. If she's not contributing to the mortgage she'd then own £20,000 / £250,000 = 8% for example.

Then when you sell, the house sale amount pays off the remaining mortgage and whatever is left is then split by your percentage of ownership.

That's what I understand anyway! I have a deed of trust with my partner and that's how we protected having different deposits. Hope that helps.

A deed of trust can be setup either way - it can be for a set %age, or for a set £amount. Or in our case our deed states a minimum of £x to cover what we paid, but if Y% is higher, we get that instead.

I think the issue may be that there is a mortgage lender involved. I'd imagine they would always want to have the first charge on a property that they lend against, so will be unlikely to want to lend when a Deed of Trust is involved.

Windofchange

No you can have a deed of trust on a house as we and many others no doubt do. It simply states that the bank has first charge and after that any sale is split x amount to me and y amount to my partner (or percentage if you would rather). Why are you finding it impossible to get a mortgage? Her age would have a part to play I would imagine more than any trust deed. A lot of products won't lend beyond 70, and those that do may be more cautious of doing so in the current environment. Are you being turned down on mortgage / affordability grounds or just because you want a deed? 

sarahjaneralph

She’s 75 so cant be on the mortgage
ive had a mortgage approved and offered but they won’t allow a deed of trust - I believe they must have first charge on it
i think the ideas here should work but I’m getting nowhere
example : 100k cash mums and 80k mortgage so the 100k needs a protection 

Thrugelmir

Correct there's a conflict as far as the lender is concerned. The lender has to have first charge on the property this is standard lending policy. By virtue of the money being lent to you rather than gifted. Then legally your mother has a vested financial interest in the property.  This is then compounded by her living in the property resulting in the lender potentially having difficulty in repossessing the property.  

On top of this there's potential deprivation of assets to be considered. 

A deed of trust resolves none of these issues. 

Unfortunately what you are attempting to achieve isn't straightforward nor is it simple. Your mothers age being the obvious constraint in obtaining a joint mortgage. Which is the simple solution. 

getmore4less

A mortgage(with first charge) and trust deed are not incompatible  but many lenders won't like them
(mortgage and will are in effect the same structure just that the distribution happens on death not a sale while still alive)

This may end up needing to be another sole borrower joint proprietor case

There was another just the other day. and a thread back from 2017 that had more details.

https://forums.moneysavingexpert.com/discussion/5763258/can-i-go-on-the-deeds-but-not-on-the-mortgage