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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience:  Solicitors 2 years plus PQE
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My husband and I are looking to purchase a property

Resolved Question:

Hi,
My husband and I are looking to purchase a property jointly with my parents.
The property is £850,000 and my parents will contribute £425,000 cash and my husband and I will contribute £125,000 cash and £300,000 mortgage.
The question I have is what is advisable in terms of legal documents, to provide the mortgage company and also to safe guard each of us in this joint purchase?
Many thanks.
Rebecca Tyler
Submitted: 10 months ago.
Category: Law
Expert:  Alex J. replied 10 months ago.
Hi, Thank you for your question and welcome. My name is ***** ***** I will assist you. Is the mortgage company aware of this arrangement - have the consented to the joint ownership? Is the mortgage just in the name of you and your husband? Kind regards AJ
Customer: replied 10 months ago.
As yet I have not applied for a mortgage as I have been advised by my FA to obtain legal advice as to what provisions need to be put in place, so that he can then approach a lender that accepts this. The mortgage will be in mine and my husband's names.
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. The main issue is the mortgage company would want the property in its entirety as security. This means if you defaulted on the mortgage they would sell the house, take their proceeds first and then pay your parents and then you with whatever is left. The first question is, will your parents accept the mortgage lender placing a charge over the whole house? Secondly how do you want to own the property - if either party passes away who should inherit who share of the property - would you want your share to go to your husband for example? Are your parents looking to make a profit from this - would they be prepared to lend you the money?
Customer: replied 10 months ago.
This is a question I need to put to my parents, how do I come back to you to discuss this further?Many thanks
Rebecca
Expert:  Alex J. replied 10 months ago.
Hi, No problem. The thread should remain open. Please kindly revert to me on this thread whenever you are ready. Kind regards AJ
Customer: replied 10 months ago.
Thank you I will get back to you.
Kind regards, Rebecca
Expert:  Alex J. replied 10 months ago.
Thank you. I look forward to hearing from you. Kind regards AJ
Customer: replied 10 months ago.
Hi, my parents are not keen on a lender placing a charge over the whole house. In terms of what happens on death, it would be that whichever of my parents goes first their share will go to the other one. Then their share will go to me. In terms of my husband and I, he'll get my share and visa versa. My parents are not looking to profit from this and I wouldn't want them to lend me the money. Many thanks. Rebecca
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. You will therefore need to own the property as "tenants in common" - this means your respective shares are distinctly divisible and can be bequeathed to whoever you wish in a will. In order to apportion who owns how much you will need a document called a deed of trust. In terms of the mortgage you wont be able to find a mortgage lender that will be flexible on this term - they will require what is known as an "all monies charge" - that means they will have a charge over all monies owed by you and your husband to them. This will affect the house as a whole and if you default on your mortgage payment, your parents maybe left to negotiate with the bank to stop the bank taking possession of the property - the bank cannot claim money from their share of the property but your parents will effectively lose control of the property until it is sold, if you were to default. Kind regards AJ
Customer: replied 10 months ago.
Good morning, thank you for your advice so far. I've spoken to my Father and he says that he expected the mortgage company to wanting to place a charge over the whole house. If we were to go ahead with this scenario what would we need to do? Kind regards, Rebecca
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. The first thing to do is find a mortgage company that will be prepared to provide you with a mortgage over a property for which you are joint owner. Your parents will then likely be required by the bank to sign a statement saying they have received independent advice (and they will require a statement from the solicitor giving this advice) and understand the risks they are undertaking. The first step I suggest is you find a mortgage lender that is prepared to lend so they will tell you what requirements they have. Secondly I would sit down with your parents and calculate how you want to split the house (and any profits from sale) in percentage - you will need agreement on this to sign a deed of trust which will contractually document your split ownership.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience: Solicitors 2 years plus PQE
Alex J. and other Law Specialists are ready to help you
Customer: replied 10 months ago.
Hi, if my parents were to gift me the £425,000 as a gifted deposit for the purchase, to help us get the mortgage, what could be put in place at a later date (after completion) to have them put on the deeds of the property and show them having a 50% share of the property? Thanks Rebecca
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. If it was a gift, you would have to just transfer a half share in the property at a later date as seperate transaction. What you could do, although it would not protect your parents if you ever went bankrupt, is sell them a beneficial interest in the property, you could have a deed that states they are entitled to an interest in the proceeds, but this would not be registered anywhere. Kind regards AH
Customer: replied 10 months ago.
How would the mortgage company react to us selling 50% of the property to my parents? What we really want to do is to have a legal document in place to state that my parents have £425,000 of their own funds within the property and that should anything happen then it will cover them as having a financial interest in the house. We are finding it difficult to find a lender that will accept a deed of trust, so we're thinking that if we combine all the funds to purchase the house, we can make these changes afterwards. But you say that my parents names could not be added to the deeds of the house?
Expert:  Alex J. replied 10 months ago.
Hi, Thank you. The easiest way to solve this is having you parents lend you the money. As an alternative you could have them as beneficial owners, they wont be on the house deeds but you would have a separate document that states they are entitled to X% of the proceeds of sale of the property.

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