Shared ownership with loan from parents

MoneySaver_1978

Hi, we are in the fortunate position that our parents are willing to loan us the £118k needed for a 40% share in a shared ownership property.  It's a loan but with a much cheaper interest rate! Does anyone know if this is allowed under shared ownership? I will speak to the company tomorrow but wondered if anyone had any insight this evening. Thanks

housebuyer143

Are you getting a mortgage? It's a no go with a mortgage for sure.

MoneySaver_1978

housebuyer143 said:

Are you getting a mortgage? It's a no go with a mortgage for sure.

They would lend the entire share of £118k so no mortgage is required.

waseem432000

If there is no mortgage involved, I don’t think housing association will care where you get your money from and they will happily sell you that share. 

I am sure people with experience of shared ownership will share their opinion. 

tetrarch

What you're talking about is well described and the pitfalls and benefits clearly explained here:

https://www.samconveyancing.co.uk/news/conveyancing/borrowing-money-from-family-10024

Regards

Tet

Brie

Who is "we" and "our"? 

No one likes to think of potentially splitting up but have you considered any impacts should this happen - assuming "we" is a couple?  Would your parents expect immediate settlement should you go your separate ways?

Or if you are siblings or two friends who happen to share a property you will still need to think of the implications of things going wrong in the future.  Should one of you die who gets the property, is it noted in both your wills?  What if one of you brings a partner into the mix?  If so what will you do if that relationship breaks down and the ex wants their portion?  

MoneySaver_1978

Brie said:

Who is "we" and "our"? 

No one likes to think of potentially splitting up but have you considered any impacts should this happen - assuming "we" is a couple?  Would your parents expect immediate settlement should you go your separate ways?

Or if you are siblings or two friends who happen to share a property you will still need to think of the implications of things going wrong in the future.  Should one of you die who gets the property, is it noted in both your wills?  What if one of you brings a partner into the mix?  If so what will you do if that relationship breaks down and the ex wants their portion?  

Thank you for your comments and I take your points. However, these are not a concern for any party. My husband and I have been married for many years. Parents will loan us both half each. Just wanted to check if it was a possibility with shared ownership.

wjr4

Surely the whole point of shared ownership is that it is aimed at people who aren’t being lent £118k??

wjr4

Could you afford a property without shared ownership? What is your income?

artyboy

wjr4 said:

Surely the whole point of shared ownership is that it is aimed at people who aren’t being lent £118k??

What difference does it make whether you're borrowing the money from parents or from a bank? 

Perhaps your point of principle would make more sense if it was just being gifted, but if it needs to be paid back then a loan is a loan...

user1977

artyboy said:

wjr4 said:

Surely the whole point of shared ownership is that it is aimed at people who aren’t being lent £118k??

What difference does it make whether you're borrowing the money from parents or from a bank? 

Perhaps your point of principle would make more sense if it was just being gifted, but if it needs to be paid back then a loan is a loan...

They are means-tested though (or tend to be) and I wonder if someone who can borrow from the Bank of Mum & Dad might be put further down the list than somebody who has to borrow from a normal lender. No idea though, so why not just apply and find out?