Posted on 18 February 2012 by June
I want to loan my daughter the money to pay off her mortgage, am I allowed to do this?
There is no reason why you should not lend you daughter the money to redeem her mortgage if you have sufficient savings available.
However, before you do, your daughter should check whether there are any early repayment penalties payable? It might be that she is still within a benefit period where early redemption could result in penalties of up to as much as 5%. It might be that she will be better off waiting until she is out of this period to redeem the mortgage. The other thing for her to check is whether or not her lender offers a deed storage service. Sometimes you can leave a small amount outstanding and the lender will store you deeds for you. Alternatively, she will need to find somewhere safe to keep the title deeds and banks or solicitors normally make an annual charge for this service.
There are things for you to consider too. Do you have other children who might feel aggrieved by your genorisity if you don't do the same for them and you should check with your solicitors if there are any inheritance tax or capital gains tax implications.
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We recommend you seek professional advice with regard to any of these topics where appropriate.