• Buy To Let Mortgage To Friend

    By Guest on 22nd Mar 2016

    Both my husband and I have a poor credit history following our divorces and are in the last year now of our IVA. Given this we are led to believe it is very unlikely we could ever obtain a mortgage and certainly couldnt use help to buy.

    A friend of ours does have good credit and has offered to take out a Help to Buy mortgage as a buy to let. They will then let the property to us and we would hopefully seek to transfer the mortgage from them at some point as our credit history improves over time.

    We will put down the deposit - we are looking at properties in the region of 180 and have a 10k deposit available.

    Are there precidents for this? Is this feasible? What would we need to do to protect everyone's interests and to ensure that all got something from the deal?

    Thanks Katy

  • 1 Answers

    By agb270367 on 22/03/2016

    Katy,

    There are number of issues here, but I would be inclined to avoid this kind of arrangement. Help to Buy is not available for buy to let mortgages. Most buy to let lenders will want a minimum of 20% deposit. If you friend intends to let it to you on the quiet, then all of you would be entering a very tangled web and would be a party to mortgage fraud. I will explain a bit more.

    A Help to Buy or residential mortgage, does not usually permit the letting of a property, so your friend would be in breach of the mortgage terms.

    You would need to gift the deposit to your friend for the lender to be comfortable. Your friend then has your money and the property would be in the friends name.

    Avoid this kind of set up and look to get clean and start a fresh, you can start planning now. If neither of you have ever owned a property you should both look to start a HELP to BUY ISA and kickstart it with the maximum amount, information on this is available on the government website or Gooogle Help to Buy ISA. With this the government will add 25% to your savings for a house purchase (subject to limits andTt & Cs) Make sure any payments you are making to IVA and any other credit arrangements are not late. Keep payments on time and get evidnce you have cleared IVA at the end and time will heal your credit rating.

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