Mum's mortgage ended & she still owes £25k !!

poppy10_2

She can't sign the house over to you without clearing the mortgage.
You can't take on a mortgage without a deposit.

ILW

Gorgeous_George wrote: »

Rubbish poppy10.

OP could easily get £45K on a £180K house. £135K deposit.

GG

They may still demand a cash deposit, despite the amount of equity. It shows affordability.

opinions4u

I would be 99% certain that the lender will agree to extend the term on an interest only basis. Talk to them.

Do you really want to be paying CGT on something that starts life with a £135k gain?

There are pro's and con's to all of this as I have discovered from an IFA on here (thankyou), as in - if my mum gives me the house and continues to live there, I would have to pay Capital Gains Tax when I eventually sold it

jimmo

opinions4u wrote: »

Do you really want to be paying CGT on something that starts life with a £135k gain?

Where on earth does that come from?
For Capital Gains Tax purposes if the OP buys his mother's house from her for £45k it will be a transaction between connected persons and deemed to have taken place at open market value.
http://www.hmrc.gov.uk/manuals/cgmanual/CG14530.htm

Kev64

Having spent a good hour on the phone to a very nice lady at Moneymadeclear.org.uk, it would seem that getting an extension on the existing arrangement may be the best option, for several reasons: -
If my mum gifts the house to me and I add my card debt to the mortgage, I am merely extending my own debt, and the house is still not exempt from the local authority means test should my mum ever need to go into a care home. Also, should my financial circumstances take a nosedive and I become bankrupt for example, I don't really want my mum's house sitting on my list of assets - especially as half of it belongs to my sister ! Additionally, I would need to take out a Buy to Let mortgage if I was not living in the house myself and renting it out to my mother (which effectively I would be). Also, the Pensions Agency or whoever it is, would no longer pay the £60pm towards the interest, should I take over ownership of the house with my own mortgage. So, all in all, it looks like there are plenty of disadvantages to her transferring the house to me whilst she is still alive.

The Benefits Agency should still continue to pay the existing contributions if the existing arrangement is just extended - as long as it's not a new loan or an increased amount.

I have it in writing from the Building Society that they can extend the existing mortgage on the current rate until my mother eventually dies, at which point, as long as the interest keeps getting paid on the outstanding capital (by me & my sister), they will just wait for us to clear the mortgage by whatever means (sale of the house / another mortgage).

They (Moneymadeclear) did suggest that I look into getting a Lasting Power of Attorney whilst my mum still has all her marbles, just to be on the safe side.

I would need to get that drawn up with a solicitor, though that is less urgent than deciding what to do with the mortgage at this moment.

How much do solicitors charge for advice ? I would like to run all this past my mum's solicitor before we sign up to anything, but as I say, neither of us has much money and I'm wary of sitting in a solicitor's office for twenty minutes only to get an invoice on the way out for £250 + vat !

CloudCuckooLand

Some solicitors do the first half-hour free.

If you (or Mum) has a solicitor, ring and ask their policy/charges for a chat firstly, and POA secondly.

Meeper

ILW wrote: »

They may still demand a cash deposit, despite the amount of equity. It shows affordability.

Nonsense. Providing a deposit has nothing to do with affordability. If you are purchasing a property at under value from your mother there is no need to provide additional deposit personally. Mum will need to sign a waiver and state that the difference in the valuation and purchase price is non-refundable and that she has no further claim over the property, however that's not normally an issue to a mortgage lender.

As has previously been suggested however, you can't just let your mum do this without seeking proper legal advice. If she needs to pay for care fees, etc in later life, her assets will be taken into account. If your local authority discover that she has given away a massive chunk of money or equity that she could have used to pay the care fees, they may decline to cover the costs or come after you for them.

This is a difficult area and not one that should be discussed in a public forum or in a phonecall with anyone. Go and find a solicitor specialising in this area and sit down with them to discuss. Worth spending £100 or so for that to get the facts right.

Gorgeous_George

Hi Kev64

I'm pleased that commonsense seems to have prevailed. Good luck with whatever you do.

GG