First of all, it might help you to know I reside in the UK. It might make a difference.
We (my gf and myself) are buying our first house and my parents are willing to help us out.
What has been proposed is that they will pay our deposit (probably 25%) and we will get a mortgage for the rest.
In return they will take ownership of 25% of the property. In this sense they aren't giving away their money, they're investing their capital in a property. We will then raise capital and "buy back" the 25% (or on selling the house will return their investment).
My questions are thus:
- Is this possible in practice? Can my parent's legally "own" 25% of a property and myself and my girlfriend own the other 75%? What implications does this have at the time of selling and such? My parents are very good natured, however I want to know where we stand legally.
- Will this change the nature of my mortgage? If my parents put down 25% of the property value in cash, but then take ownership of 25% of the property does that still count as a "deposit" in the eyes of a mortgage company? Are there any differences?
- How easy (legally and in practice) will it be to "buy back" the 25% off my parents later on?
- Is there anything else I need to know going down this path?