The Basics of Virgin Money’s Family Mortgage Program

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If you use a family mortgage, be sure to do it right. One way to make everything official and protect everybody is to use a service for loan agreements, servicing and legal filings. Virgin Money’s family mortgage product does all of those things for you. Take a closer look at how the program works and decide if it's right for you.

What is a Family Mortgage?

A family mortgage is a home loan set up between family members. Parents might help children buy or refinance, or a more distant relative can lend a hand. Ideally family mortgages are win-win solutions for everybody.

Documentation of a Family Mortgage

To formalize your family mortgage, Virgin Money provides loan agreements (along with miscellaneous riders -- if the property is a condo, for example). They also provide documents to secure the loan. A secured family mortgage may help borrowers with income tax deductions, and they help protect lenders in case the borrower defaults, dies or is sued.

Family Mortgage Packages

Virgin Money offers several "packages" for your family mortgage. This includes basic in which legal documents are needed for a proper family mortgage. There's also full servicing in which documents, plus payment processing and optional credit reporting are needed. Lastly, there's full closing, which includes full servicing, plus closing and title work.

How Much Does the Family Mortgage Cost?

The cost depends on which family mortgage package you choose. You can always ask local attorneys what they’d charge to document a family mortgage and make an informed decision. The basic package is least expensive, and cost goes up from there.

If Virgin Money services your family mortgage, you pay a fee with each payment. Minimize these fees by paying less often than monthly. Pay quarterly or semiannually, for example.

You can also cancel some services if you find that you no longer need them.

Family Mortgage Logistics

To set up your family mortgage with Virgin Money, contact them directly. Provide details about how you want to design the loan. You can be creative with your family mortgage, but be sure to follow tax laws and local rules.

Once you apply and pay Virgin Money, they send documents to the lender for approval. The borrower signs the documents (with a notary) and forwards them to Virgin Money. Virgin Money then sets up bank account links and files your family mortgage documents with local government offices. 

Refinancing With a Family Mortgage

If you refinance an existing mortgage with a family mortgage, you’ll need to pay off the old mortgage somehow. First, pick a closing date and ask your current lender how to pay off the mortgage by that date (sometimes called a 'payoff letter'). But first find out how payoff letters work.

The new (family) lender sends funds to the old lender, and the old lender releases any liens on the property.

Tax Reporting

Virgin Money provides tax information about your family mortgage. They do not send an official tax form, but you get a “statement” that you can forward to your accountant.