My sister wants to invest cash in a property I will buy but how?

sheramber

Does your sister want to invest or do you need her money tom buy what you want?

First you need to establish if you can get a mortgage with a gifted deposit.

If the money is a gift your sister will need write a letter stating thst and that she does not want the money repaid.

Otherwise it a loan which would be charge on the property but the lender would have to agree to that.

Or it is a joint deposit with both of you on the mortgage

Consult a mortgage broker to find out your options, if any.

_Penny_Dreadful

Foggy999 said:

Wow. I didn't think it was THAT bad an idea. It would reduce the size of my mortgage substantially. I would live there but if circumstances change I could sell. This is just a short term investment. 
Thing is even with a substantial deposit I am struggling to find somewhere in London that I would want to live in. Market is dry as a bone. Without this setup I will be forced to leave London and my job. I actually asked HOW this could be done not if was a good idea. Surly a deed of trust or something like that could be put in place?

Well it is a bad idea for the reasons I and others have given. Property is not a short term investment and good luck finding a mortgage lender that will go along with one borrower but two owners or a large loan forming part of the deposit. A deed of trust will help with none of those things. 

Schwarzwald

Foggy999 said:

Wow. I didn't think it was THAT bad an idea. It would reduce the size of my mortgage substantially. I would live there but if circumstances change I could sell. This is just a short term investment. 
Thing is even with a substantial deposit I am struggling to find somewhere in London that I would want to live in. Market is dry as a bone. Without this setup I will be forced to leave London and my job. I actually asked HOW this could be done not if was a good idea. Surly a deed of trust or something like that could be put in place?

you are changing the situation here slightly.
Your initial post sounded as if your "decent deposit" is sufficient for your situation and that your sister "wants" to invest.
No it transpires that you would have indeed a benefit from here investing as you could stay in London which changes the assessment.

but the general take away is: this is more complext to structure and a lot of things have to be taken into consideration before doing it. also you refer to "This is just a short term investment", but what does that mean really? you paying her back the 100k in no time? why then not wait for a bit longer and then buy without the help of your sister?
if it is an investment for her, whats the return she is looking at?

personally the only set up i would consider this is a BTL, but not if one person lives in it and the other sees it as an investment. Interests are just not aligned then and conflicts pre-determined to happen. Unless 100k is no money for your sister and she really doesnt care when she gets it back, if she makes a return on it or even loses a bit, etc.

Foggy999

Thanks everybody for your patience with me and for your advice. This is pretty frustrating. I didn't think it would be this complex. So even with my 100K (I only earn £38kpa) I can't find a property I would want to live in that I can afford. What my sister wants is any profit from her stake when sold in like 5-10 years and a bed for when she visits London to do work. She lives elsewhere in Europe but is a British citizen. If I had an extra 100K to add to deposit then the Mortgage would be easily affordable and for somewhere worth living in. A bigger deposit makes sense with current interest rates right? So the positives (for me) would be a better place to live in and much more disposable income due to lower mortgage repayments. For my sister she gets a bit of profit or not depending on the eventual sale price, and decent place to stay when she works in the UK. Larger deposits also usually mean lower interest rates right? I can't believe there is not a sensible solution to do this. I am a qualified professional working in higher education and it looks like I am being forced out of London. I just got to get out of this terrible flat I rent man the property thing in London is driving me nuts!

hazyjo

Can you increase earning power, or will you have a chance at promotion? That salary sounds pretty low for London. Another £15k might get you an extra £60k-odd...

propertyrental

Any interest you pay her on her loan to you, whether paid monthly, annually or when the loan is repaid eg on sale, she'd have to declare to HMRC just like any other interest earned.

SDLT_Geek

Foggy999 said:

Thanks everybody for your patience with me and for your advice. This is pretty frustrating. I didn't think it would be this complex. So even with my 100K (I only earn £38kpa) I can't find a property I would want to live in that I can afford. What my sister wants is any profit from her stake when sold in like 5-10 years and a bed for when she visits London to do work. She lives elsewhere in Europe but is a British citizen. If I had an extra 100K to add to deposit then the Mortgage would be easily affordable and for somewhere worth living in. A bigger deposit makes sense with current interest rates right? So the positives (for me) would be a better place to live in and much more disposable income due to lower mortgage repayments. For my sister she gets a bit of profit or not depending on the eventual sale price, and decent place to stay when she works in the UK. Larger deposits also usually mean lower interest rates right? I can't believe there is not a sensible solution to do this. I am a qualified professional working in higher education and it looks like I am being forced out of London. I just got to get out of this terrible flat I rent man the property thing in London is driving me nuts!

If your sister takes a share in the property, then there will be an extra 2% SDLT because of her not being UK resident. 

That will be on top of the extra 3% SDLT if she has other property interests.

SiliconChip

hazyjo said:

Can you increase earning power, or will you have a chance at promotion? That salary sounds pretty low for London. Another £15k might get you an extra £60k-odd...

Exactly this. Your salary is too low to own in London, if you want to buy then you'll need to either earn more or move somewhere that you can afford on the salary that you'll get there.

dimbo61

Question ? 
Can you get a £300,000 mortgage by yourself ?
Take a look at Yorkshire Building Society offset mortgages 

Gavin83

hazyjo said:

Can you increase earning power, or will you have a chance at promotion? That salary sounds pretty low for London. Another £15k might get you an extra £60k-odd...

I agree. Unless you’re at the start of your career or expecting a promotion/major pay rise soon I’d be looking to live and work elsewhere. There are parts of the country where you’d actually be better off on minimum wage.

It’s up for debate how much you need to earn to live in London but I expect most would agree it’s more than £38k.

I also agree with the majority, this is overall a terrible idea. If you aim to push ahead with it anyway then there’s plenty of advice already on this thread.