Partially buying my paretnts’ house?

[Hayley27]

My parents and I are trying to come to some sort of arrangement to enable me to buy their property. The value of the property is £380,000 and I can afford £280,000
A mortgage advisor mentioned a particular mortgage whereby my parents could ‘gift’ me a certain amount of money. Are they allowed to gift me as much as £100,000?
My aim would be to pay them back the 100,000 at some point.

Our second idea was for me to enter into part ownership with them. So I buy 75% of the property and they still have a 25% investment. Obviously at some point further down the line I aim to pay them back the 25%

To add some further information, I would be buying the property on my own and I am not a first time buyer. My parents bought the house outright so have never had a mortgage on it.

My question to you all is, are these ideas legally viable?!

Many thanks in advance.

[The Expert]

Hi Hayley27, the answer to your questions are as follows:

1. Yes, your parents can gift you as much as £100,000;

2. Not possible if you are obtaining a mortgage to buy as they will need to be party to the mortgage which they may not want to do (or cant do) as it will have many implications for them.

3. I'm guessing you wont be purchasing your parents property as your main residence, and therefore you would need to consider CGT liability/Stamp Duty/Income Tax /Licences and any other taxes which may be applicable.

Option 1 seems the most sensible approach.

Seek legal advice and tax advice.

[Hayley27]

Thank you for responding with your advice.

I would be purchasing their house for my main property. They would not be living there with me.

I have since been told by a financial advisor that gifting is not an option with a mortgage as lenders won’t agree to it. This contradicts what many other professionals, including yourself, have told me though. Is it safe to assume that person was not entirely correct?!

[des8]

Assuming the £280,000 you can afford is all on a mortgage I think you will have practical problems actually obtaining it without a true deposit.

It seems to me that your parents are not gifting you the money (you intend to repay it so it would be considered a loan) and in any case it sounds more like you are being offered a discount i.e. you are being offered equity in the property, (although again you express the intention to repay.so it is not a discount but a deferred loan)
Mortgage companies won't like the repayment idea as they will not consider it a true deposit, and it could pose problems down the line if you should default on your mortgage

If it was a true discount being offered by family I believe there are a number of lenders who will accept this as the deposit without a personal deposit from yourself

I suggest you consult a specialist mortgage broker

[Hayley27]

Thank you so much for your advice.
From the 280,000 I can afford 90,000 of that is my deposit - this is currently in a savings account.
I have spoken to a few mortgage advisors, who have advised me to seek legal advice from a conveyancing solicitor!

[des8]

Obviously there are going to be difficulties.
Good luck

[The Expert]

Perhaps consider a Declaration of Trust, subject to lenders approval.