Option 1
You properly buy the house from them in future:
*they are at risk for that entire period
*you’ve given all your deposit to them so will have to raise again from scratch
*tax liabilities associated with gift of cash for deposit
*potentially fraudulent (how will they buy/use house? buy-to-let? principal home? need to make sure whatever terms they are given a mortgage on are adhered to. A good question to ask yourself is “would a lender be happy if they knew what we were planning?” If the answer is no, then be careful 🙂 )
Option 2
You somehow manage to come up with a bizarre structure which allows your friend to gift the property to you and discharge the mortgage (I can’t for the life of me work out how this would ever be possible, but you never know):
CGT
If your friend “gives” (i.e. gifts) you the property and it’s not your principal home (i.e. buy to let), you could be on the hook for a hefty CGT bill when you resell the property. Definitely worth checking out.
For example, if you purchase a buy-to-let property for £200k and sell at £250k, then your taxable part of the sale would be £50k.
However, if it’s gifted to you and then you sell at £250k, then your taxable part of the sale is £250k.