Using a LISA towards an unencumbered mortgage on my partners house

moneynewbie123

Hi all, this is going to be pretty niche so please forgive me for the waffling!

The crux of the question is can I use my Lisa towards a new mortgage being taken out by myself and my fiancé, against a house that she owns outright.

My fiancé's parents remortgaged their house just under 6 years ago, when she moved to Leicester for university, in order to buy this house so that she could live in it, and rent out 2 rooms to lodgers. The house was bought in her name to avoid stamp duty costs, and the rental income has been paying off the mortgage on the family home.

My partner is now finishing university, and when her lodgers move out in July, I will be moving in. The plan was always to sell the house at this point, with the money paying off the remainder of the mortgage on the family home and whats left being split between my partner and her sisters however, we are now planning to stay in Leicester longer term, so keeping this house makes more sense than buying something else....a 'better the devil you know' type of scenario!

Therefore the current plan A is to take out an unencumbered mortgage for some of the value of the house (about 75% LTV) and gift this money to her parents to use as they wish, paying off their mortgage and splitting some profit with the other sisters, so that we properly own the house, and there are no longer other parties involved.

As you'll have gathered, my partner is of course no longer a first time buyer so, whilst I still am, any other property we bought together would be subject to the full stamp duty. The only benefit that remains to me as a first time buyer is the use of my LISA.

Whilst I do not have a huge amount in there, if I were to pay the penalty it would amount to nearly £3000 so I am keen to use it effectively!

The issue I see here is that no one is 'buying' anything in this scenario, so whilst i would be on the mortgage and could be on the deed (or not if it was advantageous financially) I am not 'buying' my first home. 

Does anyone know if there would be any way for me to use my LISA, without paying the penalty, towards some kind of deposit or initial payment towards an unencumbered mortgage?

Thanks to anyone who can help, apologies again for the hyper specific scenario!

se2020

Yes, you can use the Lisa.

Check about the unencumbered mortgage though.
As far as I know you already need to own the house ie, you'll need to be put down as an owner of the house before applying for the mortgage 

moneynewbie123

se2020 said:

Yes, you can use the Lisa.

Check about the unencumbered mortgage though.
As far as I know you already need to own the house ie, you'll need to be put down as an owner of the house before applying for the mortgage 

Thanks for your reply! In terms of the practicalities of carrying this out... Would I not lose my first time buyer status at the point that I was put down as an owner? Or would it all happen as a sort of combined process so i would still be able to use the Lisa without penalty?

se2020

moneynewbie123 said:

se2020 said:

Yes, you can use the Lisa.

Check about the unencumbered mortgage though.
As far as I know you already need to own the house ie, you'll need to be put down as an owner of the house before applying for the mortgage 

Thanks for your reply! In terms of the practicalities of carrying this out... Would I not lose my first time buyer status at the point that I was put down as an owner? Or would it all happen as a sort of combined process so i would still be able to use the Lisa without penalty?

Thats what I ment,
I don't think a bank will accept you for one as you won't be an owner. You could both just get a regular mortgage and you can use the Lisa with that although the application/affordability is a bit stricter 

moneynewbie123

se2020 said:

moneynewbie123 said:

se2020 said:

Yes, you can use the Lisa.

Check about the unencumbered mortgage though.
As far as I know you already need to own the house ie, you'll need to be put down as an owner of the house before applying for the mortgage 

Thanks for your reply! In terms of the practicalities of carrying this out... Would I not lose my first time buyer status at the point that I was put down as an owner? Or would it all happen as a sort of combined process so i would still be able to use the Lisa without penalty?

Thats what I ment,
I don't think a bank will accept you for one as you won't be an owner. You could both just get a regular mortgage and you can use the Lisa with that although the application/affordability is a bit stricter 

Ahh I see what you meant now, thanks again for the help