helping a grand parent

doughuelas

hi, i am looking for a bit of advice. i live in scotland so the legislation may be a bit different. to cut a long story short, my grandmother is retired now and has very little of a pension, she said to me the other day that she will never fully own her home because she has a particular mortgage where she is only paying the interest and when she dies her life insurance will contribute to pay off the balance of the mortgage.

i have suggested she get another type of mortgage but under the current climate and with her lack of income from her pension i do not think tis would be wise.

therefore, is it possible for me to buy the house off of her but still allow her to stay in the house. i would charge her rent that is enough to cover the cost of the mortgage which would now be in my name and then she would be able to claim housing benefit to cover the cost of her rent.

this ways my grandmother can enjoy the remaining few years of her life knowing she does not have to worry about money and can use the spare cash to heat her house properly.

its just something i am considering looking into but i thought i'd first see if it was possible

silvercar

i would charge her rent that is enough to cover the cost of the mortgage which would now be in my name and then she would be able to claim housing benefit to cover the cost of her rent.

The council could get sniffy about paying rent to a relative. Even if it was all set up properly and approved your grandmother would have money from the sale and therefore may not be eligible for HB.

Inheritance tax, capital gains tax, deprivation of assets are all topics to read up on before you go ahead.

poppysarah

Get her to sell the house and move in with you.

Mr_Matey

hi doughuelas,
It's nice of you to be looking out for your gran.

Your Gran may wish to consider a Reverse Mortgage. These products were designed for people in her situation and free up equity in the home that is repaid on death.

I'm not sure of their availability in the UK and it may affect any benefits she is receiving, so make sure you see a financial advisor if you decide to go down that path.

doughuelas

thank you everyone for ur advice.

i was originally thinking more along the lines of...for example; just say to keep it simple she had 20k outstanding on her mortgage. would i be able to get a loan/mortgage to cover her 20k outstanding and buy it off her for 20k in this instance?

technically she would'nt be receiving any profit from the sale of the house as such so there wouldn't be any issue of inheritance tax etc etc?

i know it sounds dodgy but i'm just looking into different ways to help her out that will free up her pension to buy things she wants instead of struggling for the rest of her days

silvercar wrote: »

The council could get sniffy about paying rent to a relative. Even if it was all set up properly and approved your grandmother would have money from the sale and therefore may not be eligible for HB.

Inheritance tax, capital gains tax, deprivation of assets are all topics to read up on before you go ahead.

silvercar

CGT: when you eventually sell the property there will be a CGT liability. This will be based on the difference between the market value of the property now with (effectively) a sitting tenant paying low rent and the price you achieve when you sell it.

Deprivation of assets: If your grandmother needed to go into a care home (and with the best of intentions, sometimes this is the only option), she may be considered to have given her home away cheap in order to avoid it being sold to pay for her care.

Inheritance tax: If she weren't to survive for 7 years after the sale, the property could form part of her estate, even if it is in your name.

Obviously I've been brief and I don't know your circumstances or your grandmothers age/ health, but these are things you need to consider. I'm not saying don't do it, just investigate all angles before you proceed.

scuzzboy24

Your grandmother wouldn't be entitled to Housing Benefit (at least for five years).

This is because she would have previously owned the property which she is renting and she did not have to relinquish ownership to remain in the property.

Its covered by Regulation 9(1)(h) of the Housing Benefit Regulations of 2006