Question: Covering mortgage for retired parent

ModernSlave

Dear All

A spot of help please.

If my elderly mother (currently renting after selling up) provides 70% of the cost of a flat would I be able to cover the remaining 30% by a mortgage?

I would like to help her buy a nicer place than she would be able to otherwise afford. She is retired and getting the absolute minimum in terms of pension.

Has anyone else done this? Any advice much appreciated, thank you.

PS She sold because where she lived was really hit by the cold last winter and it took a lot out of her healthwise.

Thrugelmir

Why not invest the sale proceeds, continue to rent and enable her to live out her retirement comfortably?

ModernSlave

Thanks for the suggestion. Her savings would not earn her even a quarter of the cost of a rental each month. Renting when you are earning can save you money compared to a heavy mortgage but renting that eats into your capital isn't ideal.

Thrugelmir

ModernSlave wrote: »

but renting that eats into your capital isn't ideal.

Capital is also there to be used. In a measured way of course.

Owning a property comes with additional expenditure that renting does not incur. So there is a set off here too.

Not suggesting any particular course of action. Just that every avenue should be explored.

Senior_Paper_Monitor

Assuming all the rest of your figures (credit rating, affordability) stack up and selection of lender that accepts non-resident partners and your mum's age it should be fine for you to suppliment (or totally pay) the mortgage BUT you will both be on deeds (register of title) and the mortgage.

You should use wills/trusts/tenancy option (probably tenants in common)/deed of trust combination (not necessarily all components needed - all depends on actual circumstances) to protect all interests and potential circumstances (including your pre-deceasing your mum and any matrimonial isses as a result of this and/or any other circumstances) and bear in mind any IHT and/or CGT issues that might apply. i.e Take advice !

Further comment - I am not recommending thsi action necessarily, just answering the initial question. Items #2, #4 and #6 make a valid alternative suggestion that should also be considered.

kazwookie

Is your mother getting all the other benefits she is entitled to.

I personally sould suggest, using the interest from the money to carry on renting.

ModernSlave

She isn't getting any benefits. If she bought a flat she'd be entitled to some benefits.

InMyDreams

ModernSlave wrote: »

Renting when you are earning can save you money compared to a heavy mortgage but renting that eats into your capital isn't ideal.

Why does having an earned income make a difference to whether renting would save you money?

If she buys, isn't her capital going to be eaten up by falling house prices and other costs instead? Could you not subsidize her rent to the same tune as coving the mortgage would have cost you?

Having already sold her house, it seems madness to me at this stage to tie all her money back up into a property. She should make the most of it while she still can! I can understand elderly people not wanting to move from the home they have lived in for years, but she's already done that hard part.

ModernSlave

The general consensus is that she should continue to rent. Thanks for all the answers suggesting that she do that. She does not like renting and does not wish to continue it so I wouldn't be happy pressing that choice on her.

Many thanks Senior Paper Monitor for your advice.