Helping Mother in Law with Mortgage Payments Advice Please

TravelExplorer1001

My mother in law is recently divorced, the house has gone up for sale at £120000 6 months ago, but as yet there has been no interest whatsoever. There is £47000 outstanding on the mortgage at the moment and my mother in law desperately wants to stay in the home. She is on a low income and needs to get a mortgage for the outstanding amount and also some extra in order to buy her husband out. She has been offered a mortgage for £57000 which is great and it works out at approximately £480 a month repayment which is cheaper than it would be to rent anything round here. The problem is that after all her utilities/insurance etc there would be nothing left for her to have a 'life' as such as she would constantly either just be working or stuck in the house on her own. The maximum length they will take it over is 14 years due to her age so there is no option to increase it to bring the payments down. This is also the only deal we have been able to find that will borrow her the amount she needs. Heres the tricky bit, she has asked for help and I am more than willing to help her with her mortgage payments for say £150 a month meaning I would be paying just over 30% of the mortgage payment. As the mortgage will be in her name, is there a way of me securing my money back. For example if she was to sell, would I be able to get my 30% entitlement? Would we be able to draw up a contract to state that in the event of her death or sale of house I would be entitled to 30% before her assetts are divided etc or would I just need to trust that she would state this in her will and keep proof of all payments made? Obviously im happy to help, but I also want to make sure that I get my money back in the future. Any advice greatly appreciated.

beecher

I'd be wary as you are committing yourself to paying for part of the mortgage for the next 14 years. Are you willing to do that? What will happen if repairs are necessary, ie new roof or the boiler packs in? Who will pay for that? I think you need to seek professional advice so as you know exactly what you're getting yourself into.

druss

Legally you can register to have your 'interest noted' via a solicitor, this is a basic agreement that lodges your interest in the property and stops it being sold without your interest being removed/fulfilled.

TravelExplorer1001

Thanks for your help, Im going to make an appointment to see a solicitor next week. Thanks again.

Robert_Sterling_3

lkash20 wrote: »

She has been offered a mortgage for £57000 which is great and it works out at approximately £480 a month repayment which is cheaper than it would be to rent anything round here.

Heres the tricky bit, she has asked for help and I am more than willing to help her with her mortgage payments for say £150 a month meaning I would be paying just over 30% of the mortgage payment. As the mortgage will be in her name, is there a way of me securing my money back. For example if she was to sell, would I be able to get my 30% entitlement?

You may be paying 30% of the mortgage. But what do you mean by 30% entitlement. Mother in law already has equity in the house on day one. You are contrbuting to the £57,000 mortgage only.

TravelExplorer1001

Robert_Sterling wrote: »

You may be paying 30% of the mortgage. But what do you mean by 30% entitlement. Mother in law already has equity in the house on day one. You are contrbuting to the £57,000 mortgage only.

Yes thats correct, so I dont expect anything of that of course. However if house prices do rise again and the market value of £122000 increased to say £140000 in say 10 years time as an example that would mean an increase in equity of £18000, would I therefore not be entitled to a pro rata amount of the £18000 increase?

silvercar

If there has been no interest in the house for 6 months, that does suggest it is not worth £120k in the present climate. If people aren't even looking, never mind making silly offers, you are probably way overestimating its value.

Say for the sake of arguement it is really worth 100k. A mortgage of 57k leaves 43k equity.

If you are paying a third of the mortgage, that is 19k. So you could claim that you are entitled to 19% (19/100) of the property value.

If in 10 years time, the property is worth 150k, your entitlement is worth 19% of 150k ie £28,500. Some of that is mortgage - all 19k if it is an interest only mortgage, leaving you with £9,500 as your share. From this you should take off 19% of all the selling costs.

If you are not living in the property, then the bills are not your responsibility. I would expect that you contribute 19% of the maintenance of the property necessary to maintain its condition.

Legally, if you own 19% of the property, without living there as your principle private residence, you should make a CGT declaration on sale and pay any CG tax due. If the property isn't in your name, you will probably fall below the radar.

Robert_Sterling_3

lkash20 wrote: »

Yes thats correct, so I dont expect anything of that of course. However if house prices do rise again and the market value of £122000 increased to say £140000 in say 10 years time as an example that would mean an increase in equity of £18000, would I therefore not be entitled to a pro rata amount of the £18000 increase?

Yes I think that would the logical MINIMUM amount due to you. Since you are paying money monthly but not living in the property I think that you could make a case for also having repaid to you the money you have paid plus interest at the appropriate rate.