Mums House signed to me, what next?

redlady_1

Im pleased someone mentioned the care home fees as this really is a massive issue.

I would suggest you not look at this from your and your partners perspective but from your mothers. She has much to lose is this isnt done properly.

Doshwaster

t0mbop wrote: »

This is it, it's going to be a Q&A session at the solicitors too, because neither of us can afford silly fees and needless charges.

My boss always tells us: It is silly to pay too much for legal advice. But it can be absolutely disastrous not to pay enough.

VIGILANT22

BoGoF wrote: »

Just make sure you take specialist advice or else this could bite you and your mother hard a few years down the line. By 'specialist' I don't mean the person dealing with the transfer.
QUOTE]


This is a very good point as I have known solicitors do transfers and not explain the implications involved....When later questioned about the reply was, "they didn't seek advice on these matters".

GDB2222

margaretclare wrote: »

Your Mum no longer owns the house she lives in, you own it. She is therefore your tenant and you are her landlord.

The first thing to do is to agree a fair rent she needs to pay you, for you to give her a rent book and to collect her rent. It has to be a rent on a level with rents being charged for similar properties in the area. This rent becomes part of your income and you need to declare it on your tax return.

Why shouldn't mum live there rent-free? That would make the transfer ineffective for IHT, of course, as a gift with reservation, but does that matter?

In any case, mum needs a formal lease for life at nil rent, as otherwise she would have nowhere to live if the OP does not pay the mortgage. That will drastically restrict the lenders available and the amount they will be prepared to lend.

I think there are probably better options than this, anyway.

spuds_2

I think most of the issues have been covered by the above posters, but I can't stress too strongly how much you need specialist advice on this matter. There could be very serious implications for your mum a few years down the line.

She needs to sort out a will that reflects her wishes asap. It cost us about £200 for two of us (though we did it in the Will Week system, so it went to charity).

Is there no other way you can get on the property ladder? Could you live with her rent-free and put the saved rent money towards a deposit?

I think your current plan has so many real and possible complications - from mortgages, to benefits, affordability, having children etc etc. - that I can only foresee problems for all concerned. Good luck, but please take specialist advice.

Fire_Fox

t0mbop wrote: »

Hi guys,

Me and my parter currently live in rented accomodation, but my Mum has kindly suggested to sign her little mortgage-free terraced house over to me, on the basis that she still lives in it and uses it as her house.

There are a couple of reasons for this involving previous family disputes over wills and such like but another point she raised is because we have very little facility to save and to be perfectly honest are impatient, it might help in some way to obtain our first bought house together.

I've spoke to some guys at work who are quite financially aware, and the general rule of thumb is that yes it can be used in some way. My boss said what he would do would be to borrow a large amount against the property, interest only, and pay that. In turn that would allow you to use that as a deposit on our own place, making the mortgage smaller which he advised to be capital repayment. He seems to think that an interest only borrowing on my Mum's place, plus a smaller mortgage on our place combined would be less than probably the 90% LTV mortgage we'd have as a first time buyer, when we can eventually afford it.

I'm not very clued up on this sort of thing I just wondered what peoples ideas were and how I can play the system (not in a fraudulent way obviously) but any tips or tricks I can use as Wednesday we meet the solicitor to transfer the house. I'm also not sure how this works buy my Mum's looking after that side of things.

If you own a second property this will affect your ability to claim any means-tests benefits until your mum passes on - who knows if you or your partner will get made redundant, become ill or injured and cannot work long term, difficult or unplanned pregnancy, split up and you need to pay off your partner ... and if any of these happen when you have two mortgages you could very quickly get into financial difficulties without the state to fall back on.

Is your mum going to pay you rent of any sort? In which case you will have all the legal responsibilities of being a landlord with few benefits as, if it is deemed a 'contrived tenancy', your mum will not be able to claim housing benefit. You also need to consider the 'deprivation of capital' rule if your mum needs residential care in her latter years.

If you cannot afford to save then I would suggest you cannot afford to service two mortgages. You will also have the responsibility to repairs and maintenance to two houses, buildings insurance for two houses - do not underestimate how much home ownership costs compared with renting.

Borrowing beyond their means is exactly how thousands of young couples got into negative equity over the last five years, and exactly how thousands of families are getting repossessed. You cannot risk getting repossessed if you have a mortgage on the house your mum lives in - the bank will chase you for up to twelve years for any shortfall in the sale!

Fire_Fox

t0mbop wrote: »

This is it, it's going to be a Q&A session at the solicitors too, because neither of us can afford silly fees and needless charges.

But, Mum's house is mortgage free and she's trying to help. That said, if the worst happened with jobs and finances, I'd rather lose my rented house than her home because I'd been foolish.

The solicitor will be quizzed in depth about possible pitfalls and red tape. It's not a fraudulent excersize it's my Mum trying to help in about the only way she can! Some parents can lend their children deposits and such like. My Mum has very little, just enough to get her by so it's a possible solution.

We're not sponging and looking for an easy ride, but as a young couple looking to get on the first rung of the property ladder, which is extremely difficult, you'd explore avenue too!

Cheers

DO NOT simply rely on the solicitors advice: it is not his responsibility to know about state benefits for example. You need the advice of a several different experts - probably a solicitor, an accountant, an independent financial advisor ... if you cannot afford this then once again, you cannot afford home ownership.

You seem to think there is a choice between losing your future home and your mum's home: you may not have the luxury of choice! Would you feel the same about being evicted from the family home if you had two young children and your wife was pregnant? :huh: Once charges start being added or you get CCJs things tend to snowball, after a repossession often the only way out is bankruptcy - except you cannot do that as your mum's house would have to be given up.

It is NOT extremely difficult to get on the property 'ladder' but it does mean a lot of sacrifices. Do you know where every last fiver of your salary goes? Have you read around the boards, threads such as 'Eat Healthily on 50p per Day' and 'Live on £4K for a Year' (whole family!) are very inspirational. Give up the satellite TV, sandwich shop habit, social life, takeaways, car, holidays. Take on a second job and graft for a year or two, move into a shared house or up north, grow your own veg, haunt charity shops, start matched betting and you will have that deposit.
http://www.makesenseofcards.com/soacalc.html

Running_Horse

t0mbop wrote: »

What's sparked it is people constantly telling me, "Now's the time to buy, house prices are low, get in there!" and I think they have a point, but we can't.

Oh dear oh dear oh dear. You won't find many on here think prices are low, and more than a few think they are still way too high.

t0mbop wrote: »

Yes we might have to wait, that's a real possibility and we're saving as we speak

That is the answer to your problems, not mortgaging your mum's home.