If we buy a home for our son, can he get a mortgage later?
Posted on 17 September 2014 by Valerie
Hi. My husband and I are looking to purchase a property value £210,000 for our son and his family to live in. So that we can proceed quickly we propose to use our own money to purchase, and after purchase our son will apply for a mortgage of £140,000. What are the chances of him getting the mortgage, and how will the lenders feel about us having a £70,000 interest in the property. Thanks, Valerie.
Without knowing the personal financial situation of your son and his family, I can't really say what his chances of getting £140,000 would be. However, you don't mention if the property will be purchased in his name or yours? If the property is bought in your name then most lenders will look at a concessional family purchase, which is where your son would effectively buy the property from you at £140,000 and not the open market value of £210,000.
If you buy the property in his name, then he would typically have to wait until he's owned it for 6 months before he can remortgage. This is beacuse most lenders have a rule that you have to have owned the home for that period of time, before they will consider a remortgage application. Also there are some lenders who would class the remortgage as 'debt consolidation' which would rule them out.
With regards to you retaining an interest in the property, all lenders will want to know the terms and conditions under which this will be registered. They will want to know if there's any set time for the monies to be repaid, and if there's any interest being charged, and if so whether this is monthly or annually, so that they can take it into their affordability calculation.
I think it would be a good idea to go through your options in more detail, and you can do so by contacting one of our consultants on 0344 346 3672 and they'll be able to give you a clearer idea of how we can help.
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