Can I buy my mums home?

babsand16

Hey,

I currently live with my mum and recently we have been dabbling with the idea of her selling me the house we both live in to help me get onto the property ladder.
She knows shes giving me the house when she passes on, so wants to help me now while I am still young (21).

I have a secure job and we don't believe obtaining a mortage will be difficult.

My mum has equity in the house and therefore we can sell it to me for less than she would if she sold it to someone else.

e.g
House is worth £175k, she has £125k equity, so she can sell it to me for £50k as she'd use that money to pay off the mortgage so she is debt-free.

What is the easiest way of doing this?
Are there any specific implications of doing this?

Any help would be appreciated

LilacPixie

Do you have a deposit??

Pitlanepiglet

How will this work in the future, what about as and when you have a partner and children, will you all share the same house?

How old is your Mum now?

babsand16

I can put down £10k deposit if I really have to, as I said the mortgage won't be an issue.
My mum is 49.
I am going to go into property development in a few years time, I don't need to worry about sharing my home with my mum lol.
Its just to give me a step up onto the property ladder at a time when it seems most sensible for our personal circumstances

I'm really wanting to know if I'd have to pay some sort of tax as a result of buying the home, such as capital gains etc?

Pitlanepiglet

Capital gains tax won't apply as long as the property is your main residence, even if you buy it at a lower price.

Your mum would be strongly advised against giving you all of her equity at her age, she has years ahead of her and keen though you might be to make your fortune in property development you have no guarantee of success.

babsand16

Pitlanepiglet wrote: »

Capital gains tax won't apply as long as the property is your main residence, even if you buy it at a lower price.

Your mum would be strongly advised against giving you all of her equity at her age, she has years ahead of her and keen though you might be to make your fortune in property development you have no guarantee of success.

Thanks for that. I wouldn't be looking to sell my home or release the equity in it at all to fund any properly developing ventures in the future.

We're doing it to cut costs on my mums behalf. I can afford to pay the mortgage more than she can, and she is very happy to hand things over to me.

G_M

Tax is not an issue. Your mum's security is.

What if something disastrous happens with your business and you're forced to sell the house to pay debts?
What if your future husband and you decide to live in Spain and decide to sell the house?
What if you and your mum fall out?
What if your mum meets someone new (my mum did at 76!)
What if what if what if..

Now all these things might seem unlikely, silly, or not a problem to you.

But it makes your mum very vulnerable.

tanith

Has your Mum got proper provision for her retirement? The equity in the house might be of use to her in the future if she doesn't have anything other than a state pension to rely on...Non of us can see into the future and know what might happen , she may be giving up her independance in the future.. but we don't know enough of her circumstances to know this but its possible..

EDIT; was just reading another post by you where you state your income as £13000 per annum, would this be enough for you to pay a mortgage, bills and all other expenses that go along with owning a property?

noh

Where is your mum going to live when you go bankrupt due to debts incurred in your property developing business?
Where is your mum going to live when you divorce and the house needs to be sold to satisfy the financial settlement?

There are many other things that could happen that would leave your mum homeless.

She would be very ill advised to give you the equity in the house at any age especially so at the very young age of 49.

What you are proposing is very disadvantageous to your mother.

kissjenn

The amount you should be paying your mum in rent would cover a large portion of a £50k mortgage. You're effectively taking a £125k gift from your mother and she is leaving herself with zero protection when she gets a bit older.

The questions you need to ask are

What happens if you and your mum ever fall out? You can chuck her out of YOUR house and she has no defence.

What happens when you meet someone and want to set up home? You either move mum into your lovenest or you chuck her out (nicely or not).

What happens if you property business needs equity? The banks will DEMAND you fund a lot from the huge equity in YOUR house. If it fails or you default then mum is homeless again due to no fault of her own.

If she needs help day to day then the logical step is to sell you only the £50k portion still under mortgage. You get a part share in a house (which you will have huge difficulties cashing in) and she lives mortgage free.

If she is doing this to reduce her assets to get any benefits it's deprevation of capital and she'll get nothing.

No solictor worth his salt that your mother consults will agree to this with getting her to sign caveats that she fully understands the implications of these actions. She is destituting herself for no material benefit at all.

The only winner in this is you at the complete expense of your mother. As a future property magnate I'm sure you completely understand this now and will not pursue this.

noh

kissjenn wrote: »

.......The amount you should be paying your mum in rent would cover a large portion of a £50k mortgage....

Yes in fact I would have thought a fair rent of say £350 a month would more than cover repayments on a £50k mortgage.