Any options to use LISA when cash only?

Billsloot

Hi, we're trying to get our son on the property ladder. He has some savings and 5 years worth of LISA contributions, and the bank of Mum & Dad can make up the difference in cash.  We have tried to get a smallest mortgage to tick the government 'buying with a mortgage' box.  But we cannot get anyone to lend to us even though the desired mortgage amount is small in relative terms to the property value (we've just gone through a guarantor mortgage application process with Barclays and after several months they've just turned down the application because I'm a contractor to a non-UK company).  He ticks all the other boxes i.e. first time property purchase, buying through a solicitor.  Would a family loan satisfy the criteria, or has anyone gone through something similar?

masonic

One or two people have commented about successfully arranging a private mortgage to qualify. You would need to find a solicitor knowledgeable in this area to draw up an appropriate legal agreement, and ensure the solicitor handling the property purchase (if different, probably should be different) is comfortable with the arrangement, as they will need to declare the scheme rules have been followed.

Billsloot

@masonic thanks for your reply.  I've found the threads regarding private mortgage now, thank you. My brother and I previously set up a similar arrangement to lend money to my mum for her to buy her house - a loan agreement and a separate loan charge agreement which was drawn up by my Mum's solicitor and then reviewed by my solicitor and my brother's solicitor.  I was hoping to use a modified version of these documents to lend to my son. I'm not sure if this equates to a 'Private Mortgage'.  I've been in touch with my son's solicitor who is doing the conveyancing, and the response was "It is a bit of a tricky one as most family loans/charges are not regarded as a commercial transaction. My advice will be to ask the LISA provider to confirm in writing that the same is acceptable to avoid any issues in future."  I've tried contacting HMRC this morning and their response was "I would suggest querying this with his solicitor as they will be dealing with the conveyancing for your son." I went back to HMRC with the solicitors response and have now received another response from HMRC "If the LISA provider needs clarification from HMRC, they have a contact route to HMRC for enquiries." As the lady on the other thread said, you would think that HMRC could clarify the rules given that they are the ones who set the scheme rules in the first place. Very frustrating.  Looks like we will have to go to the LISA provider and hope for the best.

masonic

I'm not surprised HMRC is unwilling to give advice about a specific case, as they rarely do. They tend to offload responsibility onto the firms directly involved.

If you aren't able to get anywhere with this route, then it may still be worth re-exploring the commercial mortgage route via a broker. It may be that there are lenders that take a more pragmatic view for a low LTV loan.