Proposed Family House Moves...Advice Pls!

Benny24

I would value anyones advice/thoughts about the following ideas our family have in mind for future well being and finances!!

My Mum currently has large family house no mortgage worth around £170,000.
I have smaller house with around £60,000 mortgage, house worth £140,000.

Due to the differing climates in house prices in the two separate parts of the country, and for what she would get in the south for the price of her house in the North, I have suggested she pay off the mortgage on my house, from the sale of hers, and live in it. She could then give me around £20-30,000 as a deposit so partner and I could buy a larger house for our future family.

Partner and I intend to marry and have children. At present my house is mine, if you get my drift! But I would plan to have a joint mortgage when we "upgrade".

What legal aspects should I be considering in respect of, well, everything!
This is where I kind of fall down a bit in my thinking and any thoughts would help!!!


Thanks !

Bargain_Rzl

I think you'd get better advice if you posted on the House Buying/Selling board

(Perhaps a board guide could move this there?)

mountainofdebt

I must admit I'm confused....

Do you mean that at the moment you mum lives in the north and you live in the south and are suggesting that your mum moves south and effectively lives in your house having given you £90K?

Personally I wouldn't even contemplate this idea if I were your mum as a) she would have to move from all her friends and she might feel indredibly lonely and b) she would be giving you £90K and have no security to show for it and family relationships do break down creating all sorts of unintended consequences.

However apart from the pitfalls that comman sense tells you that are there, I think I am righ in saying that if your mum did do this then the £90K could be seen as a gift and if she was to die within 7 years it would still may be liable to inheritance tax, abet on a sliding scale.

Benny24

Thanks for you reply Mountainofdebt

ok let me add a few things on....In the sense of the word "friend" there would not appear to be many of those around her up there, you find out who your real friends are when things happpen in life. My Mum would step in and help anyone, however when she needed it recently, I didn't see anyone come flocking to her aid. She is already incredibly lonely up there.

There is just Mum and I in our family,and we are very close. I am concerned that as she gets older she will be over 300 miles away, and that's a long way away if something happens and there are no 'friends' there to step in and help in the short term. She is my Mum and I would never leave her 'out in the cold'.

She HATES the house she is in, it was inherited, it is way too big, needs a lot of work doing to it, and it is a mill stone around her neck. The price she would sell the house for up there would only just buy her a small house down here, she perhaps may even need to pay more money, and may have to work longer.
If she were to have my house for the cost of the mortgage, she would at least have money to live on in the long term, as she only has a state pension.

The house would be her's. For her to do as she pleases, change as she pleases. I would not be selling the house anyway, as it is worth hanging onto as an investment, and I would rent it out.

We have discussed it, and it appears common sense to us, BUT am I missing something, legally or otherwise????

Claire_Jones_3

You can leave the property in your name but change the correspondence address to that of your new house. Some mortgage lenders deem a property which is being let (in effect) to a family member as just a 2nd house not a buy to let, which can help you get better interest rates and lower fees.

Would your mum own the property or would she just live in it? This may save you being hit with inheritance tax but I'm not sure so don't quote me! What the main thing you need to decide is whether she would own the house outright/ or partly or if you would own it and she would me in effect renting it. I work for a bank and deal with mortgages so if you want anymore info just pm and I'll try to answer your questions. Might be worth speaking to a financial advisor or Citizens advice for a bit of guidence.

Good luck

mountainofdebt

Well the extra information does put things in a different light.

Whilst there are the pluses: moving nearer to you, possibility of making friends and moving to a smaller house, the big minus for me (if I were your mum) would still be that for her £60-90K she wouldn't have the security of owning her own property.

I know that YOU would not see her out on the streets but sometimes events happen in our lives that have unfortuante consequences for others.

I don't know if you are married but say you are/were and gawd forbid something happened to you and you hadn't made a will. By default everything passes to your OH which in your plan includes your present home. OH then decides to sell the property your mum is in - where does leave your mum then? Can you see where I am coming from now?

To be honest I don't think there is any legal issues apart from the inheritance tax issue already mentioned although the issue of what would happen if your mum needed nursing care might be worth looking into though.As for the mortgage you would need on your new property I think you would be OK as I had assumed that you would clear teh £60,000 on your present property with the gift from your mum.

Benny24

I can see where you are coming from. I'm not married but I agree a will would have to be drawn up making the house my mum's in the event of anything happening to me.

If money should be needed for Mum's welfare then there would be no doubt that the huse could be sold/re-mortgaged for extra cash.

Will registering the house deeds in Mums name make the property hers? Or do I have to do something else?

Acc72

Further to the previous comments, the main problems would be if there were problems between you and your mum.

The other area is that you will use the money to buy an asset with your partner.

Problems may arise if you marry and divorce, or if you were to die before your mother.

I made similar comments on another thread - it might seem doom and gloom but you need to look at every possible scenario (even if you don't think it will happen - because you can bet it has already happened to somebody else).

Benny24

Thinking of covering every avenue.... I suppose I could just have a pre-nup as it were, with partner, and write in a clause that whatever money I put in I get back should things go wrong?

Partner doesn't have anything to put in at the start anyway, so there would have to be some kind of agreement drawn up. I do hate the thought of starting something together but having to draw up things incase they go worng......but having read things that can go wrong on this site it sends a chill down your spine!!

linlin_3

Legal issues: from your point of view: You MUST have a pre-nupital agreement.
From your Mum's point of view: if she were to die tomorrow, who would inherit? If you are her sole kin, then a house in joint names would go to you - on her death. But on your death, a house in joint names would go to her - leaving your partner and possible future children without a home.

An appointment with a good solicitor would be adviseable.