Parent providing mortgage for daughter (first time buyer)

[chasie]

Hi all
Is there any issues around me providing mortgage finance from my resources for my daughter to purchase a new house. She is a first time buyer but would not get a commercial mortgage

Thank you

 

[legallady]

Can you clarify what you mean? Are you suggesting giving her a deposit or the full purchase price? If she wouldn't qualify for a mortgage from a bank maybe this is because she isn't in the financial position to afford to buy. A lot of people are now in a lot of trouble as they bought property they couldn't afford. Maybe your financial assistance might be better spent funding further study/training to provide your daughter with better Long term career and earning prospects

 

[Brendan Burgess]

Hi Chasie

I presume that you want to provide her with a full loan to help her buy a house.

You envisage that she would repay this loan.

There is nothing to stop you doing this.

After you give her the loan, you can also take out security for the loan by "mortgaging" her home. This means that you can repossess it if she fails to repay the loan. I am not sure if this is necessary, but you should do up a short contract clarifying that it is a loan and not a gift.

I think you are better making it an interest-free loan. Otherwise, you will pay tax on the interest received while she will not get much tax relief on the interest paid.

If you have enough money to give her a loan, do you have enough money to give her an outright gift of cash and just let her buy the house? It would be simpler. But then it might be good discipline for her to repay the loan.

 

[chasie]

Thanks Legalady & Brendan
The situation is that I can provide for my dauthers apartment from my resources in its entirity Any advise on whether the property should be in her name or in mine & allow her to live there

 

[Khublei]

Well if it's in your name then surely you'll have to pay stamp duty?

 

[BazFitz]

Be mindful of the gift tax implications of such an arrangement.