, Thank you question and welcome. My name is ***** ***** I will assist you. Given the fact that you are lending your son money you will have to obtain advice on this following reasons:
1. If anything goes wrong, if you have used a solicitor you will have the benefit of indemnity insurance;
2. You will need a legal charge over the property secure your money against other creditors in case he becomes unemployed or goes bankrupt etc;
What you need is a loan agreement and a legal charge of the property. This can be done an property solicitor who should be able to act you given your relationship.
You should pick a normal rate of interest to go in the loan (anything less than 6-8% would be enforceable) - you can then just waive the interest, or let it accrue and only charge it if he sells the property or goes bankrupt.
If you go to the Law Society they will be able to recommend a solicitor close to you -
Will your son need a mortgage as well?
Thank you so much. That all make perfect sense. No, he won't need a mortgage too - that's what seems to be the beauty of it it - investing in his future rather than a buy-to-let property. Why do I need a normal rate of interest? I understand that if I don't charge interest I won't have to pay tax as it's just repayment of a loan.
, Thank you. If you have a very high rate of interest it may cause the following problems:
1. You may not be able to get a solicitor to act of you - because a high will mean that a solicitor is less likely to justify any potential conflict of acting of you;
I wasn't planning on asking interest at all just repayments linked to inflation perhaps.
2. A high rate of interest may not be enforceable against any creditors of he went bankrupt.
Inflation linked to me seems very sensible. I would have personally said 1-6% would be ok.
Can I assist you any further? Any feedback is gratefully received. Kind regards AJ