Purchase 1/2 of my mothers house

CLAPTON

I would counsel against downsizing if at all possible
your mother is still quite young and may live for 25 or more years; during that time house prices are likely to rise considerably so downsizing now would seriously affect future flexibility

I think you should look more closely at why she is in financially difficulty; if she has a pension and works and is sensible with money one has to ask why she is so hard up

what is her income
what are her debts
would it be possible for the children to help her clear the debts: would that be sufficient to allow her to stay in the property?

getmore4less

You are in effect just createing a debt against an asset and paying interest to the lender with mum reducing income to fund this.

Is creating such a large lump sum necessary?

Why not just give some money to help with cash flow for the holiday etc.
no need to pay interest to third party.

densol_2

As I understand it - you are seeking to raise money against the security of your OWN home - to then pay this to your mum for a stake in her home.

Of course it doesnt have to be 50% of her house if you cannot raise that much. You could raise a smaller amount and would ensure the transfer deed recognises the correct % 's of ownership - maybe 30/70 ?

The %'s need to be the correct values of the house - as the Inland Revenue would look very closely to make sure the % you bought was for the correct current value of the house. Any transaction would be scrutinised for capital gains tax and on death. If its sold for "moneys worth" then it doesnt count as a gift or undervalue. If your mum went bankrupt again selling at any undervalue would be looked into.

As pointed above the net rental will need to be declared as an income and you will pay tax on the money.

You may find your siblings will not be happy about this - although this may be less relevant now as houses are not really increasing in value.

Hope this helps.

Fizzer

@Clapton - I can see what you mean, however downsizing is something she doesn't want to do anyway. This is really a question of how can mum afford to live where she is without resorting to ER. Essentially she's in financial difficulties from having to cope with paying off a large mortgage late in life, losing her primary job to medical difficulties and being nailed by sun life of canada and pitiful pensions that she poured money into she's pretty much the unluckiest person when it comes to investments.

@getmore4less - I'm not sure we can afford to gift a large sum of money to mum, much as I would like to. If we were to invest in 1/2 of mum's house we would also be investing for our kids future too (house prices probably will rise at some point)!

@densol - not quite right I'm afraid, we would be using some savings to raise a deposit on a percentage of her house. 50% seems a reasonable amount to give her a lump some that will last for some years to come and make life comfortable. The difference being, if she needs care in the future we haven't gifted the remainder of the house to a ER company.

Thanks again all for your thoughts...

laurel7172

I'm not sure how the numbers add up for your mum, if she's going to have to pay you rent to cover your mortgage payments. If she's struggling to meet all her bills now, how is she going to manage that? Use the capital released to pay the interest/rent?

It's entirely possible that your siblings could see this as a bit of an asset grab. After all, it looks like it's not actually costing you anything but ensuring you get most of the house.

CLAPTON

need to know the numbers to take this any further

Fizzer

@Laurel7172
- yes exactly that, use her income and capital released from the house to pay her way for the forseeable.
- What mum needs now is a way to stay in her house, if buying half her house means that I benefit from some appreciation of half of her house then so be it (I also take on a dept and the risk that mum cannot pay rent, I'm not going to kick her out of her house and would still be liable for the mortgage payments). However if the alternative is that an ER company gets the whole thing then no-one is better off (Apart from The Bank - I think they've had enough of our money TBQH).

@Clapton - house is worth £250K (as in the 1st post at the top), Mum's debt is approx £20K, and income is £29K last year

Thanks again for all the helpful comments

Thrugelmir

Why not help her by clearing her £20k of debt.

Then she keeps the house and has no ongoing rental liability.

CLAPTON

Fizzer wrote: »

@Laurel7172
- yes exactly that, use her income and capital released from the house to pay her way for the forseeable.
- What mum needs now is a way to stay in her house, if buying half her house means that I benefit from some appreciation of half of her house then so be it (I also take on a dept and the risk that mum cannot pay rent, I'm not going to kick her out of her house and would still be liable for the mortgage payments). However if the alternative is that an ER company gets the whole thing then no-one is better off (Apart from The Bank - I think they've had enough of our money TBQH).

@Clapton - house is worth £250K (as in the 1st post at the top), Mum's debt is approx £20K, and income is £29K last year

Thanks again for all the helpful comments

without the full facts about her spending it would seem to me that with 29k of income she needs to learn to budget and pay down her 20k of debt rather than contemplating moving

whatever does she spend the money on and how did she acquire 20k of debt

Ben27

Could she not get a £30k remortgage on an unencumbered property on an 8 year term when her current mortgage runs out? (taking her to 75 the max age for most places) Presumably she'd be paying less interest on a mortgage than her current debts, her monthly repayments would be about £380 pm and she'd have £10k to spare for a cracking holiday etc.