Can I mortgage house to help DD

Reported.

Not you, Lyndylou

Definitely find a financial advisor, ours has been absolutely worth his payment. I have just given my daughter just under half of her house purchase price obtained by a lifetime mortgage on my house. She has a growing business but also has some benefits. The only mortgage we could get was a joint one between her and me which had to be paid off in 10 years so before I am 80. The mortgage companies will not accept a buy to let if you are intending to put a family member in, due to the risk of them not paying the rent but you not feeling you can evict them. Also any money you put up, you will have to sign to say it is a gift not a loan.

It was really the only way, because although she has a long good record of paying her rent, when her landlord decided to sell that house it was impossible to find another house to rent for her and my DGS. Too many people going for each house and the benefits meant she was never getting offered one.

It has been the right way forward for us, but you definitely need to have an expert talk all the options through with you.

With a few years' worths of tax returns to prove that you make a consistent wage on DD, you may be able to get a bank to give you a mortgage. A bank might have a problem because you are essentially your own boss, and DD is your only customer. That makes for a very precarious business situation. I would suggest you go to a mortgage adviser, though. They could help you find a suitable option for your concerns. I worked with someone from Mortgage Advice Birmingham, and I got all of my questions answered until the last day.

Deprivation of assets? Things happen

A person who is a family member can claim HB under certain circumstances, I think.

It has to be a proper tenancy, the deposit has to be protected, and you have to be charging the market rent. So you're a "proper" landlord. If you're in Wales, you'll also need to register under the Rent Act 2016.

Bear in mind as well that the council will cap the HB according to how many bedrooms are needed (it's called the LHA).

Also, if your relative is already claiming benefits and qualifies for HB at the moment, a new claim for HB may trigger a move to Universal Credit.

Check the Shelter website.

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I may be wrong but I remember someone telling me that when renting to a relative HB is not paid please check on that I may be wrong,the rules have changed so much over the last few years.

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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.

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.

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.

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.

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.

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

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

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

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

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

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.

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

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

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.

Don’t know why there are two last words ?

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.