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Tenancy in common

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I am currently living in a house that belongs to my parents but separate to their own house where they live.

We have agreed to set up a tenancy in common between us. I have also been saving for a first time mortgage using a help to buy ISA. My question is:

If I sign up to a tenancy in common, can I still use my help to buy ISA to get a mortgage afterwards? 

The mortgage would be used to renovate the house, not to pay my parents. Thanks.

Comments

  • kingstreet
    kingstreet Posts: 39,254 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Tenancy In Common? Do you mean you are being added to the ownership of the property?

    If so, no. You will lose your FTB status.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
  • tacpot12
    tacpot12 Posts: 9,244 Forumite
    Ninth Anniversary 1,000 Posts Name Dropper
    If you have a tenancy in common, you own part of the property and will not be a first time buyer. This means you will lose the government bonus from the HTB ISA.

    You also can't get the bonus if the sole purpose of the mortgage is to do the renovations. You have to be buying a share of the property.

    There seems to be no reason to form the tenancy in common until you actually purchase the property. This will retain your first time buyer status and allow you to benefit from the government bonus, providing you also buy your share of the property from your parents. 

    I have no real experience of this, but I think that this is how it should work: Let's say the property is worth £200K, and it needs £50K of work doing on it. You have a deposit of £5K. You get a mortgage for £50K and pay £6K to your parents for a 3% share of the property. The important bit here is that you need to pay your parents MORE than you have in deposit, so that you are evidencing that you are only able to purchase the share of the property with a mortgage. You become a tenant in common with your parents. Your parents gift you the £6k (they can give you £3K each without creating any inheritance tax (IHT) liability) which you then use to do the repairs. This assumes the mortgage company is happy with this arrangement.  If you have more than £6K in deposit (after the bonus is added), your parents could create an IHT liability if they give you more than £3K each back, but this liability will end 7 years after the transaction, assuming they survive that long. 

    You should find the solicitor/conveyancer that you want to act for you in the transaction, and confirm with them that the above is going to be acceptable. Your parents should have a seperate solicitor/conveyancer but there may be an option to avoid this. Your solicitor/conveyancer should be able to confirm if they can do the work if your parents don't have a solicitor representing them.  
    The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.
  • Keep_pedalling
    Keep_pedalling Posts: 20,744 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    Your parents need to be aware that if they gift a portion of the house to you then they are liable to incur a capital gains tax liability even if no money changes hands.
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