Having Charges put into a Title deed?

Nowherefast

Good evening all. I have a question in relation to having a Charge put onto a property which I am contributing money towards to a Family Members house Purchase, So in the event of the House ever being Sold etc I would get the money I contributed back this is what I gather this Charge is added into the Title Deed. 

I have spoken to a lawyer about it they do charge quite a fee for this process.
I have been told this can also be done by myself also but need to look into how involved it is .
can this also be done after Completion?

Has anyone ever had this charge done before 
thanks in advance.

eddddy

Nowherefast said:

can this also be done after Completion?

Yes - but that would defeat the main purpose of the charge.

In simple terms, you want a charge put on the property because you are giving the Family Members a loan and you don't trust your Family Members to pay back the loan voluntarily.

So if you give them the money, then they complete the purchase - presumably you wouldn't trust the Family Members to sign the charge documents after completion either.


More generally, are your Family Members buying with a mortgage?

If so, what you describe is called a loaned deposit. (Or maybe a loaned partial deposit.)

They'll have to discuss this arrangement with their mortgage lender. Most mortgage lenders don't allow loaned deposits,

Flugelhorn

agree most mortgage companies won't accept another charge on the deeds - this has to be sorted out before completion

Alderbank

Your best bet might be joint ownership. Up to four people can be joint owners. Do you own your own house or do you rent?

user1977

Alderbank said:

Your best bet might be joint ownership. Up to four people can be joint owners. Do you own your own house or do you rent?

It doesn't sound a good bet if all they're wanting to do is lend some money, not become a joint owner.

daveyjp

Registering a charge is straightforwards,  drawing up the document which the charge relates to isn't and this is where the costs are incurred.

You need a deed drawing up which sets out the full terms and conditions of the loan, repayment terms etc.

If there is a mortgage the mortgagee may need to agree the second charge.  All needs to be done before completion, but as soon as the buyer states a third party loan is being used for a deposit the mortgagee may not be so keen to lend.

Alderbank

user1977 said:

Alderbank said:

Your best bet might be joint ownership. Up to four people can be joint owners. Do you own your own house or do you rent?

It doesn't sound a good bet if all they're wanting to do is lend some money, not become a joint owner.

OK, then another option is a Family Springboard Mortgage from Barclays. The 'helper' pays in 10% of the price as a 'loan'. This acts as deposit so the homebuyer gets a 100% mortgage on the rest.
The helper gets interest on their loan which is guaranteed by Barclays and is paid back to them after 5 years.

Does that sound a good bet?

propertyrental

how does the Helper calculate the tax on the income received........?

Alderbank

Each year Barclays send a report of interest paid to helper and also to HMRC. HMRC calculate tax on the interest  based on helper's income and other investments. 

Details here:
https://www.gov.uk/apply-tax-free-interest-on-savings#:~:text=You%20pay%20tax%20on%20any,you%20pay%20the%20tax%20automatically.

user1977

Alderbank said:

user1977 said:

Alderbank said:

Your best bet might be joint ownership. Up to four people can be joint owners. Do you own your own house or do you rent?

It doesn't sound a good bet if all they're wanting to do is lend some money, not become a joint owner.

OK, then another option is a Family Springboard Mortgage from Barclays. The 'helper' pays in 10% of the price as a 'loan'. This acts as deposit so the homebuyer gets a 100% mortgage on the rest.
The helper gets interest on their loan which is guaranteed by Barclays and is paid back to them after 5 years.

Does that sound a good bet?

It sounds more sensible, but we'll need to wait for the OP to clarify whether the borrower is also needing a mortgage from another lender.

Alderbank

Almost every mortgage provider offers family mortgages, including all the big ones, but each one has slightly different T&Cs. For example, with some the helper also has to have a mortgage with the same company.

https://www.uswitch.com/mortgages/guides/family-assist-mortgage/