Property - co-ownership

My friend's elderly parents would like to buy property in the New Territories. They have limited or no borrowing capacity but have cash from selling their last home. My friend would like to help them finance an upgrade through a mortgage.


However, as the mortgagee - my understanding was that he would be expected to be at least a co-owner of the property.


He is thus suggesting his parents contribute say 50% cash and then his own contribution of 50% is in borrowed funds, of which he would be fully liable (not his parents) - to give a 50:50 ownership between himself and his parents. Would a bank loan against this? It would be 'owner occupied' I guess.


Except that the risk of default on his loan would mean his parents could be out of a home (this would be their retirement home)... Are we missing any pitfalls?

The issue here is twofold. Firstly, the bank will assess the purchasers ability to repay the loan. Most banks like to keep the monthly repayment number below 1/3 of monthly salary. Secondly, the bank will assess where the deposit is coming from. Since in this case some of the deposit is coming from someone who is not liable for the mortgage, this will be a negative for the loan application, but may still be possible to obtain the loan. This often happens when daddy and mommy buy a nice flat for their boy, who cannot afford it. The boy can own the flat, but mommy and daddy are liable for the mortgage.