Buying a flat for son to pay mortgage on

lemonpopsicle

Our son will be moving to London in September for a new job. We are wondering whether it might be a good idea for us to buy a flat, using the equity in our home (c. 300k), and he pay the mortgage. We are retired, and have no mortgage. He won't be able to get a mortgage for a couple of years, as his income won't be sufficient (in training). Thanks

TheSpectator

The fact you are cosidering this would imply you think it might be a good idea? What would these reasons be?

First obvious question is can he afford to repay a £300k mortgage payment to you on a 'training' wage. Stamp duty on a 2nd property, who is paying that not inconsiderable sum?

lemonpopsicle

It's just at the mulling it over stage, we haven't mentioned it to him yet. We would be looking at a mortgage of 150k. Hadn't thought about stamp duty on a 2nd property, how much would that be on 150k? Thanks

caprikid1

Can you get a £300K mortgage ? You will need a fairly good retirement income to fund that. Equity release would be an exceptionally expensive way of doing it.

TheSpectator

lemonpopsicle said:

It's just at the mulling it over stage, we haven't mentioned it to him yet. We would be looking at a mortgage of 150k. Hadn't thought about stamp duty on a 2nd property, how much would that be on 150k? Thanks

Stamp duty is based on the property value not the mortgaged amount. Thresholds change from 1st April 2025 and a £300,000 2nd property would be £20,000 SDLT.

Hoenir

The money paid to you would constitute rent and be taxable as such. 

user1977

Would be more tax-efficient to buy in his own name with a guarantor mortgage.

Newbie_John

Stamp duty, tax on your sons payments to you (paid by you)..

As well as London is a massive city, he may change job in a year time to a place commutable 1h away, not liking it and leave.. not worth a hassle. Let them wait couple of years and once they've settled, know areas decide for themselves.

Yorkie1

You might also want to investigate whether you would need a Buy to let mortgage - which, because it's close family relative in occupation, might be a regulated buy to let. There are fewer of those around and a broker would be advisable.

kingstreet

Yorkie1 said:

You might also want to investigate whether you would need a Buy to let mortgage - which, because it's close family relative in occupation, might be a regulated buy to let. There are fewer of those around and a broker would be advisable.

Funds being raised on parents' property so not applicable.

movilogo

If you want to do it, just do it. Even if your son moves elsewhere property in London will hold its value so unlikely that you'd lose money.

If your son pays you back (the mortgage) don't show it as rent but show as loan repayment. If rent then you will liable to pay tax on it.