To cut a long story very short my MIL and SFIL have made some very poor financial decisions in the past. They had a lot of money that they lost setting up obscure niche companies, buying cars, buying and selling houses (they fanicied themselves as property empresarios) (sp?). They have also encouraged DH and I to take out loans in the past, and encouraged us to purchase a house from dbil with the intent to let it out, we made a very big loss with this house and we later found out they needed BIL to sell up so he could purchase a house on their behalf, we were pushed into buying quickly so he could be financially free and i truly believe they witheld info about the house in order for us to buy it. Although I take full responsibility for this as we should have done more research ourselves and not be so trusting and niave.
The culmination of all these poor decisions came to a head last year when they had to sell their home quickly rather than have it repossesed, and now have an IVA against them, they are currently renting a house in a dodgy area, and I know they are keen to move.
About a month ago they suggested that DH and I, along with BIL could help them purchase a house via buy to let, i.e we act as the purchasors and they rent, i.e. pay the mortgage. DH and I discussed this and in principle had no reservations as long as we drew up a contract stating things,such as what would happen if we wished to sell our home in order to purchase a larger property (which we would ideally like to do within the next 4-5 years.)
Yesterday we recieved a phonecall from them and they stated quite matter of factly 'oh yes, well now we'll be doing a let to buy mortgage, so you pretend we're moving into your house to rent it from you, and you move out into the new house'.
DH and I are not keen on this at all I understand that these types of mortgages can be very useful if you geniunely need to move, i.e relocation for work but don't want to sell you're home, the mortgage lender will not take into account the present mortgage on you're home as long as you can prove that you have tennants to cover the mortgage.
They have been offered by SFIL's mother a sizable deposit.
Apart from the fact that it would be fradulent to pretend to our mortgage lender that we were relocating, would'nt this have more long term implications i.e having to change our voting details, then how would this impact on school places for dc's. Also insurance details would have to be changed. Not mentioning if we wanted to move, or remortgage. Any help or advice would be appreciated. My gut instinct at this point is to say no, as is dh's, but I want firm reasons to give to MIL.