Parents Home - Getting a mortgage for an extension

73bugz · 30 March 2010 at 4:39PM

Hi

I hope that this isn't too complicated but I would appreciate any sound advice please.

Basically, myself and my partner live with my Mother in her three bedroomed house. The house is in my mums name and she owns it out right. My partner and I are looking to start a family and need more room. Mum isn't in the greatest of health and it works out better all round that we care for her and live with her.

Rather than move to a bigger house, as we like where we live and have family and friends nearby, we have decided that the best option is to build an extension onto the house.

Without going into great detail, the cost of the extension is going to be around £70,000 - there is currently no mortgage on the house and my partner and I don't have a mortgage. The house is probably valued at £180,000. The house will be left to me one day in my Mothers will.

What would myself and my mother need to do to go about obtaining a mortgage (payable by me) to have the work carried out?

I guess that one of the first things to do is get my name put on the title deeds of the house, but from there on, I haven't a clue. Apart from trying to borrow the money!

Are there any problems with tax which we need to be aware of? Can i add myself to the deeds of the house easily? Do i need to purchase the property wholly from my mother?

As I said earlier sorry for all of the questions, but like I said I haven't got a clue.

Thanks

CLAPTON · 30 March 2010 at 4:43PM

you can't put yourself on the deeds of some-elses house.

your mother can, if she chooses, give you some or all of the house

you need to ask a mortgage provider how much they would lend in your circumstances i.e. part owner of the house and taking into consideration your income... if you income meets their criteria then there shouldn't be a problem

VIGILANT22 · 30 March 2010 at 5:42PM

You should also be aware of this:

http://www.ageconcern.org.uk/AgeConcern/Documents/FS40Deprivation_of_assets_in_the_means_test_for_care_home_provision.pdf

getmore4less · 30 March 2010 at 5:58PM

It is probably worth getting some advice on this since to get it wrong can mess things up.

Some things to consider

If the plan is to care untill she needs medical help which often is covered now by NHS(but not always easy to get) to reduce the rislk of needing to pay for care

Any other children to complicate the disposal of her assets.

You plan to stay there long term and have a low risk of defaulting the mortgage, getting repoed and all of you homeless.

What happens if one/both of you dies before you mum.

73bugz · 30 March 2010 at 6:17PM

Hi

Thanks for the replies. I forgot to mention this but I do have a brother. The house is left in her will to be split between us 50/50. He already owns a house but will get his share when the time comes. I would have to either sell the house or buy his 50% stake at the time, minus the cost of the extension I guess.

The plan is to live in the house with my mother long term. We have already lived with her for 7 years. She is currently 74 years old and I hope has many years still to enjoy with us and hopefully some grand children.

I knew that this might get a bit complicated but I was hopeing that it was going to be straight forward.

Errata · 30 March 2010 at 6:34PM

You need to read up on Deprivation of Assets and understand any potential risk. You also need to consider what the position of you and your mother will be if you and your OH decide to divorce and split the marital assets.

JA1000 · 30 March 2010 at 6:48PM

In todays money it would cost you £160k for extension and buy your brother out, could you afford this today? If not then it will get very complicated later.

getmore4less · 30 March 2010 at 7:20PM

it is going to get messy, I think a 3 way chat is in order to estabish a good understanding of what everyone wants to happen and think through the senarios

Allthough mum is OK now(and makes a great baby sitter) if she should get dementia this might be difficult to care for her with young childen about.

You also need to check the situation if she does go into care, even though she owns theplace you may have a right to remain there and not have it sold from under your feet, and if not now there may be ways to protect you residence, if you plan to have kids you need to do this anyway.

73bugz · 30 March 2010 at 7:48PM

So, what are the worst case scenarios here then, lets say that Mum gives/sells me X% of the house, i use the equity (if I can) and get a mortgage to pay for the extension. Mums name remains on the house deeds along with mine.

When will I have to pay tax if she gives me say 50% of the house? Will it be straight away? or later?

What is the 7 year rule I have seen in case she needs to go into care? If she needs to go into care during these 7 years then the authority can force a sell of the house? If its after 7 years then the house doesn't need to be sold?

What a minefield!

VIGILANT22 · 30 March 2010 at 8:12PM

The 7 year limit is only for IHT - not care fees........... No time limit appplies in which the authorities have to consider that gifts are not deliberate Deprivation of Assets.

Parents Home - Getting a mortgage for an extension

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