Would you buy in to your In-Laws house????

gibboking

Hi Guys
My Hubby and I were offered an oppourtunity to buy a share in His parents house (which has a large plot of land not acres but large), and build an extension. We would all live in the house which would go from a 3 bed to a 5 bed.
We would have a 50/50 share with his parents and also a 50/50 split on all bills. They are in a bad way financilly too so its a win win for all of us at the mo.
The thing is our mortgage payments are £800pm and theirs are only £250 as they bought from the council years ago at a good rate. Is it possible to get a mortgage signed over?
I am not worried about living with them as we did for 2 years before we moved in to our own cash pit.
OH brother and sister are not against the idea as they have their own lives sorted and we would have wills drawn up and possibly contracts regarding their share of the house if anything was to happen to the inlaws.
I can't see planning permission being a problem as other houses in the area have extensions.

So would you give it ago?

Thanks
Vicky

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Lizzy

Hi what do you mean by signed over ?

Will your half of the mortgage be £800 ? as I can see from your signature that your mortgage with NR is £123k at £800 per month.

Has your place gone up in value so when you sell you will have more to put down on the inlaws ?

gibboking

I mean sign their mortgage over to us so mortgage will be £250, but we could increase that with the savings we will be making from not having a £800 mortgage and going 50/50 on all bills.
Our mortgage has £123,000 left on it and is valued at £130,000 so not alot left to play with (if we sold for that amount).

HelpWhereIcan

In practice, the way that it would need to work is that all four of you would need to be named on the mortgage on your in laws' house (as all 4 of you will be on the deeds as owners). You would be able to do a 'transfer of equity' (which will cost a couple of hundred £) to have 50% of the property transferred to you and your OH. Providing your in-laws' mortgage lender will agree, it could be as 'simple' as adding your names to their exisiting mortgage (for which they may charge a fee) and this could be the cheapest way as it should involve less fees than a remortgage and transfer of equity.

As far as any lender would be concerned, the mortgage would be jointly owed by all of you; however, there is nothing to stop the four of you agreeing a split contribution towards the monthly mortgage repayment other than 50/50.

As far as your OH's brother and sister goes, one way to protect their interest in the property could be for you, oH and in laws to draw up what is called a 'deed of trust' that sets out who gets what when the property is sold.

However, it may be simpler to have ownership set up as 'tenants in common' which effectively prevents the in-laws' share of the property automatically passing to you and OH on their deaths.

Either way, I suspect that your in laws will need to draw up new wills to ensure that their wishes are clearly expressed. You should take legal advice from a solicitor on the ins and outs of the above as I have given you my understanding of the situation which may well be incomplete.

Do not forget to get specialist advice on any potential inheritance tax implications, particulalry if you will not be paying a market price for your share of the property.

Basically should all be ok and possible, but you all need to get together with a whole of market broker and a solicitor to make sure that things are done correctly.

Hope this helps

Lizzy

Im really not sure. I think you should take legal advise it is a complicated issue. If one or both of the inlaws falls ill and they need to go into care (i think) you can be made to sell the house to release their half for their keep in a home etc and nothing much you can do about it. If you bought the whole house within 7 years of this happening,then you would not have to sell as the house would be yours.

Hummmm

Lizzy

gibboking

We have already had plans drawn up we just have to submit them.
we have had many chats with in-laws and siblings and everyone is happy for it to go ahead.
I just want to know how complicated it is going to be and where to start first, neither of us have ever sold a property before, they bought from the council and we were first time buyers.
So any advice and/or warnings would be appreciated.
thanks

Tim_L

Do nothing without talking in detail to a good solicitor (as Lizzy points out). This sort of thing can appear to the authorities like an attempt to dodge either inheritance tax or care costs and there are a lot of potential problems.

Apart from legal issues there is the question of what each half of the agreement would do if the other wished to move. You can't sell half of a house. Also you need to consider how you would cope with maintenance arrangements and also whether it is possible to live in the same house as your in-laws for an extended period - you may find this harder than you think even if you get on well with them.

Personally I wouldn't go anywhere near this sort of arrangement.

mr218

Lizzy wrote:

Im really not sure. I think you should take legal advise it is a complicated issue. If one or both of the inlaws falls ill and they need to go into care (i think) you can be made to sell the house to release their half for their keep in a home etc and nothing much you can do about it. If you bought the whole house within 7 years of this happening,then you would not have to sell as the house would be yours.

Hummmm

Lizzy

i agree with lizzy. this is a big issue for you to consider. what if they have to go into care. will you then have to sell off the property or will you have to raise cash through a new remortgage. also when you extend the house, make sure you get a good architect to draw up the plans so that the extension is sympathetic and not incongruous. anything which is badly executed can cost you in the long run and make it difficult to sell the property

hollydays

you say they are in a bad way financially.would you be able to act in a businesslike way if things got worse or complicated.what if they werent telling you the whole story.