Pay the seller back monthly, rather than official mortgage? (Parents' property)

Hello all.

This is my first post here, apologies in advance if I'm being really naive here!

Is it possible to initially be "given" a property by my parents but then pay them back monthly, rather than getting a mortgage? (They are willing!)

It's looking more and more likely that I won't qualify for a mortgage as I am self-employed (Classical Singer) and only graduated last year, so only have a year's worth of accounts. I've spent 7 months of that time under contract working abroad a Cruise Line, and have another contract with the same company for six months, beginning Jan 2016, so guaranteed income there. In the meantime, I teach singing, have various concert as a soloist with choirs etc and do some work for a music and health company. I live with my parents, so outgoings are pretty low (they're even lower while working aboard the ship, no rent, free food etc).

The property in question has been empty for 7 years and is in a run down state. It has a kitchen but no bathroom just an outdoor toilet, and would possibly be deemed unmortgageable. It does, however, have planning permission to be converted into 5 two-bedroomed flats, so huge potential. To help with the renovation, there is a government scheme, Houses into Homes, that offers interest free loans from 3 years for such developments, and I've already arrange a few meeting re this that ensured the property would be eligible. I've also had builders' quotes etc to check that the refurb work wouldn't be out of my means even with the interest free loans, and that all seems ok!

The price I would be offering for the property in the condition it's in is £50,000. Too big to apply for a personal loan? I have £5,000 of savings to go toward fees etc (not a massive amount I know...) The two financial advisers I've been in contact with have been less than helpful so far :/

Any input/ ideas would be appreciated, really!

Big thanks in advance!


  • bexster1975bexster1975 Forumite
    1.6K Posts
    Part of the Furniture 1,000 Posts Photogenic Bake Off Boss!

    Let me say up front I have no idea re:legals of buying a home off parents without mortgage. I imagine a very good solicitor will help there.

    Sounds like a great project. I assume you will convert them to flats then? Paying parents back would be straightforward once you started to sell completed flats.

    Very exciting. Good luck whatever you do with it.

    Bexster :)
  • getmore4lessgetmore4less Forumite
    45.5K Posts
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Perfectly legal and relatively easy to set up.

    They just sell you the house for an agreed price.
    You have a debt to them that you pay back on agreed terms.

    They need to do a CGT assesment on the market value(which may be much higher if it has planning).

    Just need to make sure that the terms of the debt are suitable to make it enforceable.

    Making it interest free avoids income tax issues for them

    you will need to take advice and in particular the taxible situation with the project(income, CGT).

    It may be that the tax situation make it worth looking at keeping the development and living in and renting out places.
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