Helping daughter with house purchase

saajan_12

Inacountrygarden said:

Provide a private mortgage for her. We do have an offset mortgage on our own home which is fully offset, but we could take out about £150k and add this to some of our savings to provide enough for a mortgage. The interest rate on this offset isn’t great, so we could remortgage to realise the funds.

This could work, remember any interest daughter pays you would be taxable. 
Also need to be clear and comfortable on what happens if she can't keep up the repayments - would you repossess? 

Inacountrygarden said:

Take out a joint mortgage with her as sole proprietor. 
..
Let her take out the mortgage and find a lender who would allow us to be guarantors.

These are similar, there's limited lenders who will offer this but if you find one at a good rate then that would work.
Also need to think about what happens if she doesn't pay and you're called on as a guarantor.. what protections would you want in place to recover the money? 

Inacountrygarden said:

Buy a house ourselves and rent it to them.
Thank you for any advice you can offer. 

Few concerns here - The rental income is taxable, with very little set off on the interest cost. You pay an extra 5% SDLT on the purchase price. You pay CGT on any appreciation since its not your primary residence. You have the responsibilities of being a Landlord, such as gas checks, deposit protection, etc. 

silvercar

Inacountrygarden said:

Thank you Silvercar, that is really helpful. I’ll certainly be looking at Barclays and good to know it’s not a terribly unusual thing to do. 

Similar situation in that our eldest bought a house last year and was able to take on the mortgage himself. We gifted him a deposit for this, signed with the conveyancing solicitor. 

I take your point about ‘our share’ and share your perspective on helping the kids out. 

On the stamp duty point, how did it work with you and your son being joint mortgage holders? Did you have to pay the full 3% ( as you say going up to 5%!) with your son being a first time buyer? 

Thanks again 

No extra SDLT as son is the only owner. No landlord responsibilities, no tax on interest that there would be on a private mortgage. The only liability is for the mortgage payments if son fails to make them. 

The plan is that when our son earns enough, he remortgages in his sole name. In the meantime he’s been able to live in his own place rather than drifting from rental in shared houses or a lodger to friends that have bought etc. 

Inacountrygarden

Thank you saajan and thanks again silvercar. Lots to consider but at the moment I’m favouring the joint borrower sole proprietor route which seems the least problematic. Off to do more research!