Q: My daughter has come back home after recently splitting with her boyfriend. They were saving for a house but on her own she does not have quite enough for a deposit and is unlikely to get a big enough mortgage based on her salary. I am in a position to buy a house for her, but I need a return on my money. Although I could just charge her rent I would prefer the house to be in her name. I am however conscious that I would need to protect my interest in the property as her circumstances could change in the future. Would formally setting up a private mortgage provide this protection?
A: Private mortgages are becoming quite common these days, particularly when it comes to parents helping children to get onto the property ladder. Utilising your capital in this way can also provide a better return for you in the current climate. And provided you have proper legal documentation drawn up which lays out clear terms for the loan, your interests will be protected in the event that anything untoward should happen.
You and your daughter can agree the terms of the mortgage between yourselves in respect of interest rates, repayment schedule, length of term etc, but it would be advisable for you each to appoint your own solicitor. Once you have agreed the terms, a draft deed would be drawn up by your solicitor who would then carry out the standard conveyancing procedure. This would involve checking title to the property and undertaking searches as appropriate to the transaction. When the conveyancing process is complete you would then lodge the loan monies in your solicitor's client account, ready to be passed to your daughter. It is a very straightforward procedure and therefore the costs involved should be kept to a minimum, whilst ensuring you are protected.