Acting as mortgage provider for the kids

No, but you will, the point being that you are earning interest, so you would pay income tax on this in the same way as you would on interest the bank would pay you on your savings. The only difference is that the bank usually diverts the tax (at basic rate) and credits you only with the rest, whereas with the arrangement you propose, you would receive the interest from your daughter and you would need to declare this on your tax return and pay the tax yourself.

Yes. You would draw up a loan agreement and a mortgage deed and get the latter recorded at the Land Registry. Any solicitor will be able to advise. The way this is often done is that the solicitor acting for your daughter in the purchase should be a member of a firm of at least two solicitors, so that the other can act for you (there would be a conflict of interest if the same solicitor were to act for you and your daughter). The recorded mortgage deed is what will prevent them selling the house without your permission, and which will give you the right to kick them out and sell the place yourself should the worst come to the worst.

How you would structure the loan technically is another thing you'll need to think about. You'll want to be able to change the interest rate when economic conditions change, so you might consider linking it to BoE base rate somehow. You may or may not want to pre-agree a date by which the loan should be repaid, you may want to keep it interest-only initially, etc. You may want to operate the loan account just as though it were a savings account for you, i.e. your daughter will pay you interest each month, at the agreed rate, on the actual balance in the "account". If she pays you more, that would be a capital repayment (equivalent to you making a savings account withdrawal). For tax purposes it's important to keep track of what portions of any payments represent interest (which is taxed) and which represent return of capital (which is not).

I can't see any way in which your daughter would have to pay tax - even if you *give* her the money (provided you live for another 7 years). If it's a loan, you don't need to survive for 7 years - but would probably prefer to!

You will have to pay tax on the interest you receive.

You would be wise to have the loan registered as a charge on the house, like a conventional mortgage. Then, if the house is subsequently sold, your loan will have to be repaid. You may, of course, choose to re-lend it to them if they are upgrading - but just suppose that the worst happens, and they split up and sell the house. By having it registered, you will retain control of the money and of what subsequently happens to it.

There is a simple way that avoids putting your money in any danger at all. No charges on the property, no having your names on the mortgage.

This is an offset mortgage where the cash in your (the parent(s)) saving account is used to offset the mortgage on the property. This offset account will not, of course, receive any interest.

To ensure that your daughter, son in law pay to the mortgage, just remove £xx per month from the your offset savings to another account where you are paid interest. Your dau / son in law should be paying the same amount to the mortgage supplier of course.

Your money stays under your control, and the mortgage life is reduced. The only problem is finding a mortgage provider that allows relatives to offset mortgages. A Google search 'mortgage offset relative' brings up hits that looks like Newcastle BS operate this scheme.

Don't be put off by the interest rates on offset mortgages because if enough of the mortgage is offset by relatives the rate becomes insignificant.

If you can offset all the mortgage the interest rate becomes irrelevant.

I speak from personal experience of using an offset mortgage to enable my younger son, somewhat wayward, to purchase a property. Paid for in

Your daughter doesn't have to pay tax on it. You would have to pay tax on the interest, but not the capital repayments. If you put the money into a savings account you would have to pay tax on the bank interest at the same rate, so that isn't a major issue.

You can get a loan agreement drawn up by a solicitor, and get the loan secured on the property.

Another alternative is that you buy a defined share of the house. You don't get any interest of course, but you have an investment in property. There will be capital gains tax to pay (on your share) when it is sold nbecuase it is not your residence.

Robert