Mortgages in Trust

While it’s possible for your daughter and her partner to obtain a mortgage to become part owners of the bungalow held within the Trust Fund, of which there are a handful of lenders who will consider. They are unlikely to agree on a shared equity situation where a property is held in the joint names of a trust and private individuals. 

Here’s how the process might work: 

1. Ownership structure – initially, the Trust Fund would own the bungalow, and your daughter and her partner would be beneficiaries of the trust. The trust would hold legal title to the property, but your daughter and her partner would have beneficial ownership rights  
2. Mortgage application – your daughter and her partner would apply for a joint mortgage to finance their share of the property’s purchase price. The mortgage lender would assess their affordability, creditworthiness, and eligibility based on their income, credit history, and other factors  
3. Legal agreement – your daughter and her partner, as beneficiaries of the trust, would enter into a legal agreement outlining their respective shares of ownership in the property and their responsibilities for mortgage repayments and ongoing expenses  
4. Mortgage terms – the mortgage lender would hold the first charge on the property, meaning that they have priority over any other creditors in the event of default. The terms of the mortgage, including the loan amount, interest rate, and repayment schedule, would be determined by the lender based on their lending criteria  
5. Gradual transfer of ownership – over time, as agreed upon by the parties involved, the trust could transfer more of the ownership of the property to your daughter and her partner. This could be done through legal mechanisms such as a deed of trust or transfer of beneficial interest  
6. Legal and financial advice – it’s essential for all parties involved to seek independent legal and financial advice to ensure that the arrangement is structured correctly and that everyone’s interests are protected. This includes advice on the legal implications of joint ownership, mortgage obligations, and tax considerations  

Title Deeds 

The mortgage would have to be in the same names as the title deeds and this will depend on how ownership is registered. The trust would also have to be set up so that it is able to borrow money by way of a mortgage. You will need to speak to a specialist trust lawyer to determine how best to do this. 

By setting up a Trust Fund and gifting the property to it, you provide your daughter and her partner with the opportunity to become homeowners with the assistance of a mortgage. However, it’s crucial to carefully consider the legal and financial implications of this arrangement and ensure that it aligns with everyone’s long-term goals and interests. Consulting with professionals experienced in trust law, property law, and mortgage financing can help you navigate the process and make informed decisions. 

Please call 0203 868 9133 once armed with this information and we will be able to take your details and start contacting lenders to see who, if anyone, would be willing to lend.