Posted on 11 April 2011 by A Howells
I am considering purchasing a property on buy to let by releasing £30k equity on my property and a buy to let mortgage for up to 50k. The property we have seen is in the region of £60 - £65k with approx £10k of work to be done. My son will pay the mortgage payments either on interest only or a mixture of interest only on the equity I release and repayment on the buy to let element. If he wants to get his own mortgage after a few years, say 3 - 5 yrs how will we do this and will there be any tax implications and where will he get his deposit from if all my equity is tied up? Please cold you help ASAP as we want to put an offer in ASAP.
When your son comes to take over the mortgage he will be effectively buying the property from you. At this point it is possible that there may be CGT implications for you and your solicitor will be able to advise you on this.
Presumably your son will need a mortgage and the most he will be able to raise, based on today's market, will be 85% of it's value. Depending on what happens to property prices between now and then, this may or may not be sufficient to repay the £30k of your own money you have invested. In reality it is probably best that he starts saving now with the aim of building up the funds to reimburse you.
I think it would be best for you to discuss this proposition with your solicitor before putting in an offer.
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