Parents get mortgage then transfer?

radioj

Morning everyone.

I'm moving flat soon and my parents suggested buying one instead of renting and that they could help me out. However, I have a bankruptcy on file from 2017 (discharged 2018) but no issues since and in a good job now. My parents have offered to buy the flat themselves with me renting it off them, then in a few years I can look at getting my own mortgage and buy it off them / transfer it (not sure how it works).

I just wondered if this is an idea which would make sense as none of us know much about mortgages etc.

If it matters the flat would be worth about £110-120k and I could scrape together a 10% deposit, although I think I'd prefer about 5%!

amnblog

If they are going to buy to let it to you that is a related mortgage (not a standard buy to let mortgage) and they need suitable advice from a decent mortgage broker.

If they sell on to you later once your credit has cleared out they can do so. They can even do so for less than the value so that the difference between your value and your mortgage acts as deposit, this is known as concessionary purchase.

Your parents will pay 3% stamp duty land tax on the purchase (if they already own another property). They may also be liable to capital gains tax when they sell to you and income tax on your rent before you purchase (consult an accountant).

The scheme is possible but a number of ways fall foul of the system.