Buying new home with adult child

golddusty

Advice please.
We are looking to sell our house, daughter, son in law are selling theirs and we are are looking to buy a larger house with annexe for us all to move in together.
We would use all our equity and daughter and son in law to raise a mortgage for any shortfall in their names.
Are there any tax implications and legal requirements when doing this?

davilown

It probably depends how old you are and how long you are going to live. Also, is the house going in all your names or just the kids? Assuming 'we' means you and your partner, then as long as you live for 7 years then I think that negates tax implications.

I am no expert, and you should ask for legal advice to confirm. I'm sure there'll be a few along soon who know the way of the law.

Good luck though

LandyAndy

Sounds like a disaster waiting to happen.

Joint tenants v tenants in common.

What happens on death/divorce.

You can't have a mortgage that only applies to some of the owners (AFAIK).

What happens if one couple needs to sell and the other doesn't want to?

Get yourself some good advice from a solicitor.

mufi

And what happens if one half of the equation can't pay the mortgage for whatever reason?:eek:

This has just happened to a parent/daughter combination that I know.

golddusty

I am still young(ish) but I no longer work but husband is still working. Daughter (our only child) and son in law both work. Mortgage in relation to the value of the property would be around 20% and the new mortgage would be a lot less than they are paying now. They have very little equity in their present home. We are relocating to a different part of the country and it just appears to make more sense to buy something we can all live in but still have our own space (hence annex) and share the living costs and reduce their outgoings.
We are all adults and discussed what if this or that happens. We have been married over 30 years and never say never but dont forsee us divorcing. Son in law is appreciative we need to tie up something legal that if they divorce what his share would be. Two grandchildren are both under five. So, in short we will be using a solicitor but just seeking some advice on here at this stage.

Catblue

Who will pay for the maintenance of the house?

Who is going to live in the annexe? You who has put 80% of the money in or they who can't afford to put a penny in and will have to raise the remaining 20% by way of a mortgage?

Are you sure that you know the true state of their finances? No equity in your daughter and her husband's house may perhaps mean that they are not good at budgeting (only may mean) and would like you to bail them out. You talk about how this is a good idea to "reduce their outgoings" so it sounds like you have a feeling that they are struggling but don't want to admit it.

Did you gift them a deposit for their current house (or a previous house) by the way? Just wondering because you seem like a generous person.

If you were on an equal footing financially, I could see this working out. However, given that you are funding the vast majority and they can't even seem to pay down their own current mortgage in what is presumably a smaller house, then I see trouble ahead.

Thundercat_2

You sound lovely and it's a really kind thing you're doing to help your daughter and son-in-law, but like others I would be extremely careful about covering all eventualities!

Would it not be possible for you to sell your house and downsize to a smaller house in the new location and then help them to buy a bigger house themselves? I know this still involves giving them a large sum of money, but at least you and your husband would be safe in the knowledge that you still had your own property. It would also mean that your property wouldn't be tied to theirs in the event that they couldn't afford to live there and needed to sell up (e.g. what happens if they can't afford their mortgage because one of them is made redundant/becomes ill etc, etc)

I know it's not nice to think about stuff like this, but you have to make sure that you protect yourselves as well as trying to help your daughter!

motherofstudents

I think it sounds like a nice idea and something we have thought of too. Of course you need to get some detailed legal advice and think through any worst case scenario but I hope you work something out that is fair to all of you.

G_M

If the mortgage is in the names of your daughter/in law, then the property will have to be in their names. You will be lodgers/guests/similar (depending if you make payments to them).

you will have no rights to the property. If daughter gets divorced and in-law forces sale of property, you'll be homeless. Or worse, in law could claim house and you and daughter move out!!

If your names are also on the property deeds, you will have to be on the mortgage too. So liable to pay if daughter defaults etc. And lender will have to accept all 4 names.

Then there are inheritance issues to sort out if/when one of the 4 die

So, practical questions to resolve "what if...." and legal issues (ownership) and inheritance issues.

Not insoluble, but get good advice in all 3 areas.

Also as others have said, you need clear understanding of who pays ongoing costs: utilities, repairs, insurance etc

hcb42

My friend has done this, with her inlaws, her hubby is also oonly child, and would therefore be inheriting. It is working out ok so far, five year in I think. Although I know it was complex at the start considering all the eventualities, and not without teething troubles with the day to day pressure of living in one house.

Not for me...i know that!