Can I mortgage house to help DD

@loo and pamelaj - the DD in question is currently getting some HB as I understand.

Different situation - but food for thought.

I'm thinking of doing something similar for my DD when the time comes, although I would steer well clear of a BTL mortgage personally! Too many what ifs for my liking!

I am btl LL and generally most mortgage companies now insist the rent covers 140% of the rent due to new stress test government make them do. I have never found a mortgage company that would allow you to let to a family member. You have to sign to say you will not do so. Most mortgage companies also insist you do not let to person on HB.

Its not a buy to let its equity release.

Why not look into guarentor mortgages instead. She can get a 100% mortgage if are guarentor?

Had one thought - many buy-to-let mortgages are granted on the condition that you don't rent it out to a relative (so do check if that's the direction you're going in). But I strongly feel that you need legal advice (even if you have to pay for it). This could go horribly wrong without it.

Could've almost written your post PamelaJ1 except our son and his partner did actually split up.

Loobyloo12 some lenders don't allow renting to family members. But I believe some do. We've had several mortgage lenders since we purchased our property and the rules varied.

Imm6 in your shoes my first stop would be an appointment with a financial advisor who specialises in mortgages.

I think you need a lawyer to advise you about this.

If you only have the one child, it might be possible to lend her the money needed as an advance on her inheritance.

Old gimmer would she lose her housing benefits anyway if she was given £75K?
Not sure what your what if’s are. Seems to me that there will be some no matter what route is taken.

Have been a landlord for quite a while now and have never been required to do a legionnaires test! Gas safety checks are required and new legislation is bring in a compulsory electrical safety check which will cover the wiring etc plus any electrical goods provided by the landlord

The Legionnaires risk assessment came in last last year. It’s not compulsory but the landlord is liable if if a tenant gets legionnaires and the assessment and any necessary work identified hasn’t been done.

Don’t know why there are two last words ?

Pamelaj - I was thinking more along the lines of claiming HB and not having a stake in the property.

If claiming HB, or Housing Element of UC, you'd have to declare your assets and a £75 k cash handout would most definitely rule you out of most benefits!

I'm actually confused by the OP .

I think she's after some type of mortgage/ equity release arrangement. I can understand why she would perhaps either buy a property using her own equity or take out a BTL mortgage and rent it to her daughter but I would imagine that there would be many strings to that arrangement, like PPS have said.

A good mortgage adviser (independent, naturally) would be able to talk the OP through her options.

You dont get Housing Benifit for mortgage payments as far as I know. Only for rent.

Her rent is relatively cheap and if ahe cant afford that without HB how will she make mortgage payments, especially as rates are due to go up not down

It would be very difficult to claim that she had no interest in the property if it was bought for her to live in and inherit. I think you would get caught out of you tried to swing things that way

The OP doesn’t mention whether her DD is in a relationship.
A big concern of mine would be to protect mine and my DD’s financial input. If the OP gives the D all that money she will have to sign that it is a gift and that at no time will the D have to repay it.
All the lenders want to do is to protect their investment.
She needs a very good mortgage advisor and accountant.

What would be the benefit of the situation? At the moment OP has a home with no mortgage and the Dd has low rent and HB so both are okay housing wise. All suggestions either put OP in financial risk or put the DD worse off month to month

Is there perhaps another way to help to increase the DDs earning potential so she can save for a deposit herself? A personal loan would be enough to fund a college course etc? Or help to buy a car so she can commute to a higher paid job

That would be a better route IMO

I have previously funded a relatives driving lessons which helped them to get a decent paying job once they were able to commute

If the DD is struggling to pay v low rent WITH HB then either her outgoings are v high or her income is v low and those are the things I would offer help with primarily

OP not to be morbit bit what if you need to do equity release later to fund mobility alterations, care or downsizing. If you tie your equity up in a house for your DD you could find yourself trapped in the future

If you do buy to let for her, will you feel able to sell that house if you need to money later?

Borrowing against your home for this: you have to be SURE that your house will suit you for the rest of your life because you are taking away your options/freedom/flexibility

I asked about this recently and was told that most lenders want mortgages paid off by 75 (I think Nationwide is the exception). For us Grans, that's hefty repayments for the next 5 or 10 years as opposed to 25yrs. Not sure DWP accept renting from family member

Goodness this is a minefield. After reading all posts I think I agree with notanan2. Currently we and DD have homes and if we went down the route of my original idea we need to research carefully. Will definitely seek professional financial advice. Thank you to all of you. You have been a great help.

Equity release springs to mind,you would easily get a £75k payout on a £400,000 house.Then you take out the option to pay the interest on it each month.or rather your daughter would.As you know when you pop your your clogs or the last person living their,the house is sold & the£75,000 is paid back to the Equity provider & nothing else added to it as you are paying interest each month!The down side would be you would only I will say that again Only have £325,000 wow you must live in a Posh area to pass down. BUT on the Bright side until you pop off,each year your house will increase in value even 1% each year will increase the value by £4,000 a year.& that is about the lowest increase going that you can expect.My point being in a few years time your property will increase to £475,000 .So in theory you will still have £400,000 to hand down with the sale of the house after the £75,000 equity release has been taken out of the sale of the house.

I don't agree that you should rely on house prices to increase. They may not.

Interest rates will only go up, not down.

We've had low interest rates for years but they'll start going up eventually.

As a PP pointed out, if the DD is unable to afford her current home without HB, how would she afford a mortgage?

She'd be better served by getting a better paid job imho.

We helped our AC with a hefty payment intending it as a loan to be repaid later ( or never) for a house but solicitor wanted us to sign a form saying it was a gift which we had no further claim on. somewhat reluctantly we signed with crossed fingers that the relationship didn’t break later as the partner would then have a 50% claim on what was or had been our hard saved money. Be careful. It’s a mine field out there.

To summarize:
So you provide a cash deposit which allows your daughter to purchase a property.
You take out a mortgage on your own property to add to the deposit to pay off the cost off the small property for your daughter.
The cost of the mortgage will be paid by your daughter.
I wouldn't have thought HB would be available to your daughter as she is a part owner of a property.
Can she not afford the cost of the mortgage payments?
There does seem to be a few issues here which may come into play.
Take legal advice as previous people have suggested. You can get 30 minutes advice free from some solicitors.

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