Posted on 4 December 2013 by Simon
Hi, I'm not able to get a mortgage due to low income but have a large deposit. I have been advised to get my dad to take out a buy to let, with me putting in the deposit and paying expenses. It would then be rented out. A few months down the line I would be added to the mortgage as a name. Then my dads name taken off. At the end of the two year fixed rate I would remortgage with a residential mortgage and move into the property. I have been advised to do this as a way of getting on the ladder sooner than waiting til mid next year and getting less of a mortgage through my name. What are the legalities and risk assosiated with this, what would the deed of trust cover could I lose any money. Thanks, Simon
Without knowing more about you and your dad's individual situations I can't really say for definite whether this is a viable proposition or not.
However there are a few things that I can be specific on. If your dad was to purchase the property as Buy To Let, then there would need to be a minimum period of 6 months before most lenders would consider adding you to the mortgage, and taking your dad off. The lender would also want to convince themselves that as a first time landlord you were not intending to move into the property whilst it remained as a Buy To Let.
Also we'd need to know your future plans, regarding your being able to remortgage the property at the end of two years. A low income doesn't necessarily stop you from getting a mortgage, however we'd want to discuss with you how you propose to raise your income within the next two years to a level that would enable you to then take the mortgage on a normal residential basis and move in.
With regard to the deed of trust, you would need to take legal advice on what protection it would give you. Not every lender will be happy with the property and mortgage in your father's name and the deposit coming from you, so we would need to canvas the lenders to see which ones would be okay with this proposal.
I think it would be worth running through the figures involved to see if we can take your enquiry forward. If you'd like to do so, then please let me know and I'll organise one of our consultants to get in touch with you.
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