Buying from Auntie

millermen

Hi,my auntie as got herself in to money trouble, the banks say because of her age (mid 60s) and that she re-mortgaged a couple of years ago for the same reason she'll have to take out an interest only mortgage for 10 years and then sell her house to re-pay the loan. The loan would be for 56K but the house is worth at least double this.What would be the problems involved if I bought the house for the 56K and let her live there rent free. I could take the mortgage out on either her house or my own which as no mortgage on it.

clutton_2

for you to buy it your auntie would have to pay off her mortgage in full... is she in a position to do that ?

how much does she owe on the mortgage now - and are there any Early REdemption Penalties to pay for early redemption ?

millermen

I was thinking about taking out a 56K mortgage to buy my aunties house so she could pay off her mortgage, 50K and the other money she owes. I don't think there are any repayment penalties

clutton_2

if her house is worth double £56k - why would you want to only give her £56k for it ?

once you buy it in your name she owns nothing and you would need to rent it to her ....... and she could be evicted at any time...

not to mention her losing a huge chunk of the equity in the house..

i can see that you heart is in the right place, but there are consequences to what you want to do. i think you need to talk to a whole market mortgage broker and see if there is a way....

and i think auntie needs to see a solicitor - because if she is left in a position of owning nothing, her security is a big issue for her...

how old is she ?

if you remortgage your own house - to pay off aunties debts with, who is going to repay that mortgage - you or her ? legally it will be down to you..... do you expect her to pay you for that ?? if she has been bad with money in the past she is not likely to suddenly improve and you will be left paying her housing costs......

ViolaLass

If she died within seven years, I'm sure the tax man would have something to say about her selling her home half price. Also, if she goes into a home, they may consider the knock down price to be deprivation of assets.

That is unless you would only be buying half the home.

millermen

The deal she offered me is to buy 'all of' her house for 56K I would own it and let her live there rent free

About what I'll do if she would fail to pay the bills (council and energy) is worry

She's mid 60s and not in the best of health so the going into a home or passing away thing, and what the tax man would do is the bit I know nothing about

At present I'm left half the house in her will, so if I do nothing I could lose that

clutton_2

is she claiming all the benefits she is entitled to....

talk to Aged Concern they are very good at discussing issues like this

Emmzi

you only get half the house if there are no debts to pay from her estate or she isn't repossessed.. so I'd stop worrying about that right now!

if she needs to go into home and she has sold the house cheap to you, she'll be treated as if she still has the money she should have got (ie an extra £56k) so she'll be up that particular creak without a paddle

Would she not be better just selling, paying her debts, and renting?

millermen

Would this be ok to do? For me to buy the house at approx market value, my aunt to pay off her mortgage and other money owing, what is left over to go into an account she can't 'get to', out of that account will come a monthly rent and for it to be left to me in her will.

But what happens if she goes into a home or goes bankrupt

Annisele

millermen wrote: »

Would this be ok to do? For me to buy the house at approx market value, my aunt to pay off her mortgage and other money owing, what is left over to go into an account she can't 'get to', out of that account will come a monthly rent and for it to be left to me in her will.

What you're talking about is effectively a private "sale and rent back" arrangement. If you google that, you'll find that it can cause all sorts of problems for the prospective tenant (your aunt).

If I was your aunt, I don't think there's any way I would agree to a deal like the one you've described. It sounds as though she has about £50k equity in her house - that money is hers, so why should it go into an account that she can't 'get to'? In addition, why would she have to promise that it would go to you on her death - you would already own the house?

If she was only wanting to leave half the equity in her house to you, then presumably there is another person who she wants to leave money to. If that person is a family member, they might have other ideas as to how to help your aunt.

You also need to think about what would happen to your aunt if you have financial difficulties / go bankrupt / die / get divorced.

If your aunt was in financial difficulties two years ago, remortgaged to try to fix her problems, but now needs to remortgage again, then it might help her to try work out what the root of her problem is. Does she simply have insufficient income for her lifestyle? Is she claiming all the benefits she is entitled to? Is there anything that she can economise on? ?

millermen

I'm not trying to con my aunt this is all her idea, if we go the banks way she'll only own half the house, be paying a mortgage, then in ten years time she'll have to sell the house pay the bank loan back be left with nowhere to live. Yes she'll be left with half the equity (about 50k at today money) what can you do with what is in real terms half a house go into a home? This way everybody is left with nothing(apart from the bank). The other person in the will (my sister) can't help so either way she'll get nothing.