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Parents buying with adult son

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  • Parents buying with adult son

    As retired parents we want to purchase a flat together with our adult son; we have equity and he needs a small mortgage (about 12% of the purchase price). Can we buy the property together, owning different percentages of the property, with only our son needing a mortgage?

    We understand a conveyancing solicitor could advise that the mortgage to purchase the property would need to be in all owners names. However as we don't need or want a mortgage that would mean the property would need to registered in the sole name of the mortgage borrower (our son).

    The bank staff we have spoken with about mortgages in two banks seem happy to process a loan application for our son, knowing he will share a percentage of the ownership with us. However we do not want to arrive at 'the eleventh hour' and discover a complication that front desk staff at the bank hadn't understood.

    Does any one have any knowledge or experience relevant to our situation?
    Many thanks

  • #2
    Re: Parents buying with adult son

    I know that it's definitely possible to buy a property with two or more people, where each person can own a different percentage of the property. This is known as 'tenants in common' and you can stipulate what share each person owns. The alternative is 'joint tenants' where each person owns an equal share. There are considerations in terms of what happens to the property in the event of an owner's death (sorry to be morbid, but obviously you have to think about these things), but a conveyancing solicitor can advise you about the proper considerations and rule of law obviously. Our solicitor told us that 'joint tenants' was usually the default option for lenders and solicitors, so if you want a 'tenants in common' arrangement, you need to tell them up front. Regarding the specifics of the mortgage only being in your son's name (in contrast to the property ownership deeds, which would be in the names of all three of you), I'm afraid I'm not at all sure how that would work. My advice would be to make an appointment with one of the bank's mortgage advisers to get the correct information (not just some customer service person on the front desk/phone). From the lender's perspective, what would happen if the borrower defaulted on the mortgage? Not that I'm suggesting for a moment this is what would happen, but to them it's a question of assessing risks I guess! Under 'normal' circumstances, they'd probably begin repossession proceedings, but I don't see how they would do that if two other people each owned a proportion of the house outright and owed the lender nothing. In which case, how could the property be considered collateral against the loan your son would take out? I'm sure there is a way around it, but you really should sit down with a qualified person at your bank.