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Buying A House
My question is that our son who is nearly 18 has just joined the RAF, and we have encouraged him to buy a flat asap, to make good his money and to have something for the future as he's going to be in for minimum 12 years and he will be on the property ladder when he comes out.
We want to move sell our property but once we pay off what we have left on the mortgage we have enough for a small modest house, what are the implication if we buy with our son? Can we put in what we have less what we owe on the mortgage, and he gets a mortgage for whats left.
Do we have to go to a solicitors and getting something written up? What about our daughter who lives with us (she's 19), but hasn't got the money to invest or earn enough to pay a mortgage.
She's more likely to move out etc.. And if anything should happen to us, she would get half of our share and so would our son, and he would get his third.. all sounds complicated but is it something that can happen, or are we making it too complicated?
When we move, we are hoping to get part-time jobs, and would pay all bills etc, and our son would pay the mortgage on the property, a mortgage of possibly £100,00.
help is this feasible? What are the legal implications? Is it better to Have some sort of agreement drawn up?
Thanks you all in advance
We want to move sell our property but once we pay off what we have left on the mortgage we have enough for a small modest house, what are the implication if we buy with our son? Can we put in what we have less what we owe on the mortgage, and he gets a mortgage for whats left.
Do we have to go to a solicitors and getting something written up? What about our daughter who lives with us (she's 19), but hasn't got the money to invest or earn enough to pay a mortgage.
She's more likely to move out etc.. And if anything should happen to us, she would get half of our share and so would our son, and he would get his third.. all sounds complicated but is it something that can happen, or are we making it too complicated?
When we move, we are hoping to get part-time jobs, and would pay all bills etc, and our son would pay the mortgage on the property, a mortgage of possibly £100,00.
help is this feasible? What are the legal implications? Is it better to Have some sort of agreement drawn up?
Thanks you all in advance
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You say that you have encouraged your son to buy a flat, has he already done that?. If he has your second option is unlikely to be feasible, as the odds on him qualifying for a second mortgage on the income of an 18 year old are unlikely.
If buying with you is an alternative option, yes that would be feasible as long as he qualifies for a mortgage of the amount required.
Here I will give my usual caveat that I have been retired a few years now so am getting out of date with any new rules in the industry.
You would have to think carefully about how you would all own the property to protect your daughter's inheritance and insure fairness between them. It would be advisable to register as tenants in common with each person's percentage share in exact relation to the amount they are putting in. This would be done by the Solicitor on purchase. Whilst your daughter is still living in the premises she would have to sign a Letter of Consent' which just confirms that she knows the property has a Charge on it and if repossession is ever required she would have no right to stay there.
Each Bank/Mortgage Company has it's own guidelines, so it would be a good idea if you made an appointment for the 3 of you and don't be surprised if they insist on your names on the Mortgage, this would give them protection if your son ever defaulted as they could come to you to demand payment.
As far as inheritance is concerned you and your wife could do mirror Wills, leaving your share to each other, and on second death divided between both children. This would mean your son retains his share and half of yours and and your daughter the other half.
There would be things to talk about within the family, on second death if your daughter needed her share within a short time would your son have the funds to buy her out? What happens if he meets someone in the future and wants to buy a property with them, is he going to want you to buy his share and will you be able to? plus many more questions I am sure you or your children will come up with during discussions
Before going any further it would probably be a good idea for your son to go on a couple of Mortgage sites to ascertain if he could actually get a mortgage of £100,000.
If buying with you is an alternative option, yes that would be feasible as long as he qualifies for a mortgage of the amount required.
Here I will give my usual caveat that I have been retired a few years now so am getting out of date with any new rules in the industry.
You would have to think carefully about how you would all own the property to protect your daughter's inheritance and insure fairness between them. It would be advisable to register as tenants in common with each person's percentage share in exact relation to the amount they are putting in. This would be done by the Solicitor on purchase. Whilst your daughter is still living in the premises she would have to sign a Letter of Consent' which just confirms that she knows the property has a Charge on it and if repossession is ever required she would have no right to stay there.
Each Bank/Mortgage Company has it's own guidelines, so it would be a good idea if you made an appointment for the 3 of you and don't be surprised if they insist on your names on the Mortgage, this would give them protection if your son ever defaulted as they could come to you to demand payment.
As far as inheritance is concerned you and your wife could do mirror Wills, leaving your share to each other, and on second death divided between both children. This would mean your son retains his share and half of yours and and your daughter the other half.
There would be things to talk about within the family, on second death if your daughter needed her share within a short time would your son have the funds to buy her out? What happens if he meets someone in the future and wants to buy a property with them, is he going to want you to buy his share and will you be able to? plus many more questions I am sure you or your children will come up with during discussions
Before going any further it would probably be a good idea for your son to go on a couple of Mortgage sites to ascertain if he could actually get a mortgage of £100,000.
Consider the worst case future scenario, then perhaps you will see the need for drawing up a contractual agreement, and that is best done with the help of someone who is used to such things (but no guarantee that it is perfect). The larger the number of independent individuals, the more complicated it gets. My instinct would be not to try to involve every member of the family in the joint ownership of a single property.
can you do it lawfully ? yes
we have covered most things but .... CGT for your son on his second property ( he has a flat for his first)
secondly I agree Karl
in ten or twenty y your daughter non contributory will start squawking that she hasnt had her share !
( altho not part of the question - I would assist the son on a biigger first property which will be tax free and rely on the future (ha!) inheritance tax rules which by the time you both croak will be £325 k AND another £100k to pass ont he house)
and yeah jesus you both need to make wills
( altho possibly not mirror wills)
we have covered most things but .... CGT for your son on his second property ( he has a flat for his first)
secondly I agree Karl
in ten or twenty y your daughter non contributory will start squawking that she hasnt had her share !
( altho not part of the question - I would assist the son on a biigger first property which will be tax free and rely on the future (ha!) inheritance tax rules which by the time you both croak will be £325 k AND another £100k to pass ont he house)
and yeah jesus you both need to make wills
( altho possibly not mirror wills)
Hi thanks for getting back to me.
My son hasn't got anything yet, we just encouraged him to buy somewhere, but this seems a better idea to us, as we could put the money we make from the sale of our current property, and instead of buying a modest house we could get something better, more substantial which would be our home for life and something to leave the kids. We were thinking of seeing a solicitor, station our profit from current home, then the bigger new mortgage incorporating our son and upon our demise the kids would share our deposit 50/50, and our son has the remainder because he's been paying the mortgage all the time and not us, so profit would be his, as we've lived rent free so to speak until our demise - is that right?
My son hasn't got anything yet, we just encouraged him to buy somewhere, but this seems a better idea to us, as we could put the money we make from the sale of our current property, and instead of buying a modest house we could get something better, more substantial which would be our home for life and something to leave the kids. We were thinking of seeing a solicitor, station our profit from current home, then the bigger new mortgage incorporating our son and upon our demise the kids would share our deposit 50/50, and our son has the remainder because he's been paying the mortgage all the time and not us, so profit would be his, as we've lived rent free so to speak until our demise - is that right?
There is no problem with you putting in your equity as the deposit and registering the property and having the mortgage in 3 names, as long as the 3 of you qualify for the mortgage. They will not worry about who is actually making the payments, as you will all have responsibility to meet those repayments. So think about what you could afford if for any reason your son could not pay.
As I said before Registering it as tenants in common seems sensible otherwise on 1st death the house would automatically be owned by the other 2 and on second death the remaining owner (on law of averages) probably your son would own 100%.
You need to take necessary action to protect your daughters inheritance which could be done through your Wills.
But as before what happens when/if your son wants to move on in life, gets a partner and they want to buy something for themselves. He may then tell you he needs out of the Mortgage.
Lots of family discussions of all the what ifs must be undertaken, then a solicitor will advise you of the best way to go about it.
My advice only comes from the Finance side but I would be asking a lot of questions of a customer thinking of doing this as your son is so young and only just starting out on his adult life which could take him in many directions.
As I said before Registering it as tenants in common seems sensible otherwise on 1st death the house would automatically be owned by the other 2 and on second death the remaining owner (on law of averages) probably your son would own 100%.
You need to take necessary action to protect your daughters inheritance which could be done through your Wills.
But as before what happens when/if your son wants to move on in life, gets a partner and they want to buy something for themselves. He may then tell you he needs out of the Mortgage.
Lots of family discussions of all the what ifs must be undertaken, then a solicitor will advise you of the best way to go about it.
My advice only comes from the Finance side but I would be asking a lot of questions of a customer thinking of doing this as your son is so young and only just starting out on his adult life which could take him in many directions.
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