buyinh house of parents with no mortgage involved

juggernaut1979

hi
i may have the oppertunity to buy my mum and dads house off them, without having to get a mortgage or pay a deposit.

my parents would like to sell me the house and they have been thinking aboutdoing it via a solicitor, as in making a contract to say ill pay them a set amount every month just like id have to with a mortgage however it will be direct to them and no interest charged, paid off much quicker because of this and they get the added benifit of a solid income from my payments over the next X amount of years until iv paid the full amount back!!

my question is, is this legal? it would be sold to me a little below market value also (although not much) and cant help thinking id be mad to turn it down but arnt sure about any implications.

any advice/thought greatly recieved
cheers
juggernaut

dimbo61

You will need to see a solictor about this !
But you could buy the property from mum and dad with an offset mortgage which mum and dad then set up an offset account in there name attached to you mortgage with there savings.
See Yorkshire Building society Offset ( friends & family)
That way mum and dad have money in building society which is there money and you have no access to but its saving you interest each month.
Each month you pay the mortgage and M&D take the same amount out and put into ISA,s or other savings !!!
God I am Brilliant

CloudCuckooLand

Its their house. They can choose who they sell it to, and for how much. Subject to usual tax laws!

There are some complications to doing it this way.

- your parents don't have a mortgage of their own, on the house, I take it?
- the agreement needs to detail how you gradually obtain portions, or whether it is an "upon completion" transfer of deeds
- their wills need to allow for this transaction
- depending on if/when they die, it will complicate the potential Inheritance Tax position - how will you prove to the taxman that you already own say 70%, after 15 years, for example...
- what protections will be in place, in the event of a change of heart on their part?

I'm sure there are more...

SouthCoast

I'm sure there are more...

Check out deprivation of assets.

TrickyDicky

IIRC correctly, you will have to buy it for a fair market value or there would be IHT complications. Also, for IHT reasons, they could not live in it without paying you a fair market value rent. Otherwise you might be accused of trying to evade IHT.

You will probably want to see a solicitor about all this though.

juggernaut1979

yes my parents dont have a mortgage on it, its paid off. and its not far off the market value only about 10k less, and they would not be living in it as the moved to america a couple of year ago.

i thought it would be much easier like them signing over the deeds to me then setting up an account and me just paying into it until iv paid them X amount? and setting up some agreement with a solicitor so i cant just not pay them.

cheers for the input though everyone

CLAPTON

There is no reason why they can't give you the property for nothing or allow you to buy it for the market value or anything in between.

If they are happy to transfer it into your name and trust you to repay the money then they can do that without a solicitor by contacting the land registry.

Drawing up a formal document seems to have little value ..what would it's purpose be?

But bear in mind.

-stamp duty would have to be paid on the full market price irrespective of the actual agreed sale value.

-if the price was less than the market value then there is a potential IHT issue if they die within 7 years but then there is anyway

-consider what would they want to happen if you died before them... would they still expect to be paid their money and if so by whom

-if you are married or have a partner then consider the implications of your divorce / separation




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phlash

On the gift note, need to look up Potentially Exempt Transfer for IHT purposes.

juggernaut1979

CLAPTON wrote: »

There is no reason why they can't give you the property for nothing or allow you to buy it for the market value or anything in between.

If they are happy to transfer it into your name and trust you to repay the money then they can do that without a solicitor by contacting the land registry.

yes they are happy to sign it over to me as they want me to have a foot on the ladder and an income from it as opposed to a lump sum from a normal house sale.

Drawing up a formal document seems to have little value ..what would it's purpose be?

thought that wud be an idea to give them oeace of mind that i wouldnt just not pay? theres surely somrething a solicitor coudl do tomake it binding.

But bear in mind.

-stamp duty would have to be paid on the full market price irrespective of the actual agreed sale value.

^^thanks didnt realise that

-if the price was less than the market value then there is a potential IHT issue if they die within 7 years but then there is anyway

the olds are only 50 so (touch wood) have more than 7 years left in em

-consider what would they want to happen if you died before them... would they still expect to be paid their money and if so by whom

yeah thought about that, id make a will saying it wud be sold and any outstanding to the olds would be paid to them.
-if you are married or have a partner then consider the implications of your divorce / separation
Iv thought about this and this seems the trickiest as my girlfriend wants to go halfs with me on it, but it just seems to complicate the whole arrangement further




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thanks for everyones help its given me much to think about

:T