Mortgage mums house to raise her money?

bestyman

Hi all,

Thanks in advance for any ideas or info.

Mum is 72 and lives in a house with a market value of £180k. She has an interest only mortgage and owes 30k which is due in 8 years. She has not nade provision to pay off the 30k at the end .

She is short of money and wishes to raise some money from the house. She does not want to move.

If she were to ring up a company that would buy her home and allow her to live in it what sort of deal would she get? What are the pitfalls? Can anyone recommend such a company?

Another possible option is that myself and 2 siblings buy the house from her but allow her to live in it for free? For example, buy it off her for 75k , she can then pay off the 30k outstanding and have 45k left to spend? This would mean that we would have a 75k mortgage
between us - how much would this cost?

Other issues are who is responsible for repairs? Whats a fair price? What if she lives to be 100?

We are really looking for a fair deal for all concerned. We fear a company would take advantage of the situation and offer too little for the house? Does she still pay any rent?

Any help appreciated.

firstaspect

You are unlikely to be able to buy the house for £75k, the mortgage lenders would have an issue when they value the house and find it's a lot more than that.

Jenniefour

Be very, very careful with those companies who offer these deals to pensioners, I would stay well away. That is the last resort option - and seems like there are other options to consider first, which protect your mother and allow her to stay in her own home. Assuming that your mother has/will leave the house to the three of you - and you all seem willing to help out on the money side - I imagine that there will be a way of solving this problem without creating future problems. Probably a good idea to seek quality professional advice on this - including legal since there are inheritance issues involved in this as well. My first port of call would be to discuss this with a solicitor - i.e. your mother and yourselves - and then you know what you are looking for if it turns out you need a new mortgage set up.

I would have thought that the question of repairs and so on to the house is the easiest bit here - why not simply share the costs between the three of you? It's in your mothers' interests now to be living in a well maintained home - and it is also in the longer term interests of you and your siblings when the time comes and you do inherit the house.

Rover35

As a vendors (Gift from owner) deposit this may be acheivable as it is within the family.

Other choices may be equity release. Home reversion schemes would enable her to sell a proportion of the house now and potentialy sell more later whilst retaining a lifetimes tennacy.

Life time mortgages would compound the interest doubling the debt approximatly every ten years.

Before going down this route speak to a properly qualified equity release specialist. It is a very wise idea to stick to SHiP registered schemes.

Please take some advice this is a very complex and delicate area of advice.

TrickyDicky101

Be aware there are potential tax implications upon yourselves if you and your siblings buy the property at under value from your mother: she won't have to pay CGT (as it's her main residence) and you won't have to pay SDLT (below threshold), and assuming this is all she has in the estate there are no problems with IHT. However, the base cost of the asset (house) will be set at £75k. This means when you come to sell it (assume flat markets until you do) you (as a family) will realise a chargeable gain of £180k less £75k = £105k which means you could end up paying significant CGT on it. You will have no residence relief as it hasn't been your residence. This contrasts with the position if your mother retains the property and bequests it to you on her death since it will be below the IHT threshold and its market value at the time will be its base cost if/when you come to sell it, hence minimising potential CGT payable.

dimbo61

Why not sell and move into over 55,s apartment with lifts,no stairs,walk in shower, staff on call 24/7.
Some now have shop, hairdresser, gym, cafe, and someone else to do the maintenance ,garden, etc
You can buy.part buy/part rent or rent and she can then enjoy some of the profit from her home

GMS

firstaspect wrote: »

You are unlikely to be able to buy the house for £75k, the mortgage lenders would have an issue when they value the house and find it's a lot more than that.

Would be an issue if buying from a member of the public at undervalue but when buying from a close family member there would be no issue with most lenders. It would be classed as a 'gifted deposit'
One problem may be the lender insisting on the vendor moving out on completion.

SouthCoast

then enjoy some of the profit from her home

Where I live lots of folks are showing a loss on recent purchases of this nature.