Dependent Relative

Posted on 25 May 2018 by Adrian


My parents are both retired and are about to sell their old property. With this they want to give me the deposit so that they can rent from us and enjoy their money into their retirement. Is this possible?


Hi Adrian,

There are a couple of ways that you can go about this and it all depends if your parents are going to be paying you rent or not?

If they are paying rent then you will need to look at a Buy to Let mortgage.  The choice of mortgages is restricted because any mortgage on a property occupied by a family member falls under the regulation of the Financial Services Authority and few Lenders offer regulated Buy to Let products.  The interest rates and fees on these products tend to be quite high.

If there is no rent being paid then you may be able to secure a residential mortgage.  You will need to be able to show that you can afford both the existing mortgages and any new mortgage on your earned income and you will probably need to put down a deposit of around 25%.

I recommend that you all take independent legal and tax advice before proceeding down this avenue as there is a possibility that it will be seen as a way of avoiding Inheritance Tax and there are possible Capital Gains Tax implications for you.

I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers.  Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help you find the right mortgage for your situation.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.

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