Buying a percentage of a house?

Seanc510

Afternoon all,

My partner and I are looking to buy our first home next year. We’ve been looking at buying a new build through the government equity scheme but my partners Mum has offered us the chance to buy her house as she wishes to move elsewhere. Currently her house is out of our price range. Due to this, we’ve discussed the possibility of buying a percentage of the house (say 80% with her retaining 20%).

Is this something that is possible to do? In this scenario, we would pay a 10% deposit, so the Mum would keep 20% and the mortgage would cover 70%. 

Any help is greatly appreciated.

user1977

In short, no, because apart from anything else the lender needs a mortgage over the whole property - they can't just repossess "your" 80% of it.

GDB2222

user1977 said:

In short, no, because apart from anything else the lender needs a mortgage over the whole property - they can't just repossess "your" 80% of it.

Mum could allow a charge on the whole property. It does mean that she would be rather dependent on your meeting the mortgage payments, not splitting up, etc, as she might lose most/all of her 20% if the lender repossesses and property prices are down a bit at that time.

What will she be doing with the 80% that you do pay her? And, if the worst happens, could she get by if she never receives the other 20%?

eddddy

In theory, you could buy the whole property from your partner's mum, financed as follows:

10% deposit from yourselves
70% mortgage from a bank
20% loan from your partner's mum

But I think you'd find it difficult to find a bank who would agree to a mortgage on that basis.



If your partner's mum was prepared to sell you the whole house for 80% of it's value - i.e. give you 20% of the house as a gift - that might be more feasible.

Then you could look at 'Concessionary Purchase Mortgages' like these ones:
https://www.nationwide-intermediary.co.uk/lending-criteria/purchase-types#concessionaryPurchase
https://intermediary.tsb.co.uk/criteria/residential-criteria/concessionary-purchase/


So your partner's mum gives you 20% of the house's value as a gift.  You could choose to give your partner's mum an equivalent gift when you sell the house, if you want. So the partner's mum gets her money back.


But if you decide not to give her the gift when you sell, she can't sue either of you in court. 

AnotherJoe

Edddy's idea sounds like a good one, i did similar with one of my kids (Not quite the same though as mine involved a loan).

Mum sells the house to you for 80% of its value, you get a mortgage for 100% of that 80%.

You may, over time, decide to gift mum some money that, long term coincidentally happens to be the missing 20%, but if you fall out with her she is up the proverbial creek because she cannot legally reclaim it.