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  • FIRST POST
    • ravenmoon36
    • By ravenmoon36 16th Mar 17, 10:09 PM
    • 12Posts
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    ravenmoon36
    Type of mortgage advice - we want to buy a property for my Mum to live in
    • #1
    • 16th Mar 17, 10:09 PM
    Type of mortgage advice - we want to buy a property for my Mum to live in 16th Mar 17 at 10:09 PM
    We have recently found out we have built up a sum of equity in our house (about £90,000 potentially) so we have been looking into the possibility of using this to enable us to buy a home for my mum to live in.

    She is currently in rental accommodation, as she has been her whole life, and, with rental prices soaring, and the fact that she is 58, we want to try to give her some security. We have two young children and we pay my mum as a child minder to look after them when we're at work. This basically means we pay her rent, which is currently £800 a month. Therefore, it makes financial sense for us to do this as well, as we are basically lining someone elses pocket.

    We initially went to Lloyd's, who our current mortgage is with, who recommended we buy as a second home, and once we had explained our motivation for getting a second place (we didn't think to keep this to ourselves at the time), she said that if she wasn't able to help us, we should go to an independent broker and look into a buy to let mortgage, just not mention it was for my mum.

    We were offered an additional mortgage with the bank on a second home mortgage of about £125,000, including the release of £30,000 of the equity of our house. Unfortunately, there is almost nothing in our area available for this price.

    We have been told we could have about £52,000 of the equity in our home released, so took her advice and went to see a broker about buy to let mortgages, although we didn't mention the fact we would have my mum living there. As it was an interest only mortgage, as could look neater the £200,000 mark for somewhere.

    So really, I'm just after some advice regarding the best option for us to take. I do not know an awful lot about buy to let mortgages, and obviously don't want the stress of doing something really dodgy. We would basically minus whatever the additional costs were of buying a second place what we pay my mum, so wouldn't be technically gaining any rent or anything.

    Like i said, this is all new to us, so any advice would be appreciated, or any stories from people who have tried to do something similar! Thanks 😁
Page 1
    • kingstreet
    • By kingstreet 16th Mar 17, 10:32 PM
    • 30,913 Posts
    • 16,470 Thanks
    kingstreet
    • #2
    • 16th Mar 17, 10:32 PM
    • #2
    • 16th Mar 17, 10:32 PM
    I just wrote a long answer which included phrases like "state-owned", "mortgage fraud", "deception" etc. I deleted it and started again.

    Go and get proper advice from an independent mortgage broker, hopefully someone who places their career at a higher value than your one mortgage case who will help you do what you wish without committing mortgage fraud.

    It seems Lloyds employees are happy to recommend committing an offence of obtaining a money transfer by deception but don't have the b4lls to do it themselves...
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • SouthLondonUser
    • By SouthLondonUser 16th Mar 17, 11:02 PM
    • 80 Posts
    • 10 Thanks
    SouthLondonUser
    • #3
    • 16th Mar 17, 11:02 PM
    • #3
    • 16th Mar 17, 11:02 PM
    Not to mention the tax implications. If you are employing your mum and providing her with accommodation, accommodation is a taxable benefit which needs to be declared. If you are not paying her cash but accommodation is a payment in kind, I suspect it would still be a taxable benefit. Get fiscal advice.
    • Thrugelmir
    • By Thrugelmir 16th Mar 17, 11:32 PM
    • 52,456 Posts
    • 44,696 Thanks
    Thrugelmir
    • #4
    • 16th Mar 17, 11:32 PM
    • #4
    • 16th Mar 17, 11:32 PM
    Be cheaper perhaps for your Mum to come and live with you.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • trailingspouse
    • By trailingspouse 17th Mar 17, 10:24 AM
    • 1,762 Posts
    • 2,360 Thanks
    trailingspouse
    • #5
    • 17th Mar 17, 10:24 AM
    • #5
    • 17th Mar 17, 10:24 AM
    And on top of all that, I was wondering what Mum thought of it all? She's only 58!!! OK, she's paying £800 a month in rent, but that isn't outrageous and I guess if she wanted to she could move somewhere cheaper.

    Speaking as a 56 year old woman, if any of my kids were to start making decisions like this in two years' time they would get the benefit of my opinion in no uncertain terms.
    • lovinituk
    • By lovinituk 17th Mar 17, 10:32 AM
    • 4,709 Posts
    • 5,172 Thanks
    lovinituk
    • #6
    • 17th Mar 17, 10:32 AM
    • #6
    • 17th Mar 17, 10:32 AM
    If you get an interest only mortgage what are the plans to repay it at the end of the term? Your mum will probably still be alive when the mortgage is up. If you can't repay it in full you will forcing your mum to move in her old age so you can sell the property to pay off the mortgage.
    The following is my forum signature and not necessarily a response to your post:
    "To be truly successful you must live a few years of your life like others won’t so you may live the rest of your life like others can’t"
    • pizzawithcheese
    • By pizzawithcheese 17th Mar 17, 10:46 AM
    • 4 Posts
    • 2 Thanks
    pizzawithcheese
    • #7
    • 17th Mar 17, 10:46 AM
    • #7
    • 17th Mar 17, 10:46 AM
    With an interest only mortgage you're also only 'lining someone else's pockets' - the bank's!
    • ravenmoon36
    • By ravenmoon36 18th Mar 17, 7:27 PM
    • 12 Posts
    • 1 Thanks
    ravenmoon36
    • #8
    • 18th Mar 17, 7:27 PM
    • #8
    • 18th Mar 17, 7:27 PM
    Thanks for the input.

    This is all a completely new area for me, so i asked for advice as i don't want to.be doing anything dodgy.

    I have been researching into regulated buy to let mortgages, which apparently are fine to rent to.a family member. We are also going to.book.an appointment with an independent advisor, and be upfront about the situation.

    It may be our best, and only option, is to sell our house, gaining the full £100,000 as a deposit and buy a large house we can split into two.

    Trailingspouse - all of this has been with my mum's consent. I don't know if you are unfortunate enough to be in rental accommodation, but in the last ten years, she has been forced to move 6 times, and rent has gone up massively. She is waiting to hear next month if her tenancy is renewed, and if not, faces rents that have gone up about £200 in the last 2 years. All I'm trying to.do is provide her with some much deserved security, which she has not had since her partner left 13 years ago. It is a difficult situation, but one i am desperately trying to make better.
    • C-Star
    • By C-Star 19th Mar 17, 7:55 AM
    • 6 Posts
    • 1 Thanks
    C-Star
    • #9
    • 19th Mar 17, 7:55 AM
    • #9
    • 19th Mar 17, 7:55 AM
    I have just posted a very similar situation to you - let me know how you get on and what you come up with!
    • ravenmoon36
    • By ravenmoon36 19th Mar 17, 9:30 AM
    • 12 Posts
    • 1 Thanks
    ravenmoon36
    Will do! My hope is that, as a regulated buy to let can be interest only, it makes it more affordable than a second home mortgage. It is really hard to get anything that would be suitable for under £200,000 where we live!
    • kingstreet
    • By kingstreet 19th Mar 17, 12:50 PM
    • 30,913 Posts
    • 16,470 Thanks
    kingstreet
    Will do! My hope is that, as a regulated buy to let can be interest only, it makes it more affordable than a second home mortgage. It is really hard to get anything that would be suitable for under £200,000 where we live!
    Originally posted by ravenmoon36
    You'll need to demonstrate affordability for a repayment mortgage from personal income alone with no rent taken into account.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • marliepanda
    • By marliepanda 19th Mar 17, 1:04 PM
    • 4,053 Posts
    • 7,977 Thanks
    marliepanda
    You'll need to demonstrate affordability for a repayment mortgage from personal income alone with no rent taken into account.
    Originally posted by kingstreet


    Plus you've got your extra stamp duty charge on a 200k property, so theres 7.5k to start...
    Survey Earnings 2017 - £163
    • dimbo61
    • By dimbo61 19th Mar 17, 2:47 PM
    • 9,294 Posts
    • 5,042 Thanks
    dimbo61
    As your mum is now over 55 have you or her looked into sheltered accommodation ?
    My Dad has lived in a one bedroom flat/apartment for over 12 years and is happy with both the property/rent and community he now lives in
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