Joint Mortgage Sole Proprietor

A client has a daughter in her second year course of medicine in London. They were paying £970 per month in rent for a room in a house share for their daughter. They contacted us as they had found a 2 bedroomed flat for £310,000 they were interested in buying for their daughter to live in.

A client has a daughter in her second year course of medicine in London. They were paying £970 per month in rent for a room in a house share for their daughter.  They contacted us as they had found a 2 bedroomed flat for £310,000 they were interested in buying for their daughter to live in.

Challenges
With the changes in stamp duty, this will be classed as a second property so there is an additional 3% stamp duty to pay, total stamp duty on a purchase of £310,000 is £14,800.

They have 10% - 15% deposit

Their daughter had little income of her own and was unable to buy on her own account.

Most lenders require on average a minimum deposit of 20% for second home / dependent mortgages.

Solution
Parents had excess income each month, therefore, were able to have themselves included on the mortgage with their daughter, however the property was to be registered in the daughters sole name. This meant that the daughter could benefit from the first time buyer stamp duty rates, in this case £500.

We obtained a mortgage of £263,500 on a 3 year fixed rate at 1.99% over 17 years (to parents 70th Birthday) with monthly mortgage payments of £1,530 approx.  When the rate ends in 3 years the daughter will have finished medicine school and should be able to take the mortgage on herself provided she has started to work.

Summary
  • Clients saved £14,300 on stamp duty.
  • With this lender they are allowed to rent the spare room out which they should achieve £600 per month
  • It will not cost them any more than current rent (provided the spare room is let)
  • £400 per month of their mortgage payment will be reducing the capital borrowed
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