Buying into a parents house

sanmiguel82

Hi,

My father has 15 years to run on his mortgate, approx £12,000 left to pay on a total of £21,000 over 25 years.

I want to help him out whilst also using wisely £12,000 I have saved away.

Any idea what my options are and what the possible complications and drawbacks might be? I would want my £12,000 back at some point (at such a time when the house would need to be sold).

One possible complication is that should anything happen to my father there would be a stink with my sibling over who would inherit how much % of the house.

Thanks
SanMiguel

xylophone

Do you mean that you will only want a return of the capital at such time as your father chooses to sell the house/when he dies/has to go into a home? Presumably you will also expect a return on the capital?
It should be possible to set up a formal loan agreement whereby the capital plus rolled up interest at an agreed rate is paid to you at this time?
Why not see a solicitor and discuss the pros and cons - your father could address the question of his will at the same time?
Why not discuss the proposal with your sibling and your father at a family meeting?

poppysarah

What does your dad think about your idea?
Is he struggling to pay?

CLAPTON

why?...................

ultrarunner

Essentially you are locking away 12k, i.e. a proportion of the houses value, away until such time that you sell it, if ever.

Is that a good idea - what if you need the 12k? You will be unlikely to extract that without selling the property.

I would talk first to a financial advisor, then the entire family before getting a legal document drawn up.

00ec25

there are numerous implications:

1) you become a part owner and so are liable for CGT when it is sold
2) if you also want the £12k back plus interest you will have to pay Income Tax on that interest
3) your % ownership needs to be reflected in the will so that your sibling is clear on why they will not get 50% of the value when they inherit
4) unless your payment is legally recorded (eg a charge registered against the house) then if your father needs council funded care (means tested benefit) then the house will be sold to pay for this and you may lose your entire 12K as the house would still be entirely in father's name and all its full value would be used to pay for care costs


It is nice that you want to save you father paying out on what is in reality a tiny mortgage for another 15 years but it is not clear what you expect back - if you have £12k and can afford to tie that up in the house for however long it takes your father to die then you need to be clear on how much do you want back: total £12k? £12k plus interest at x% per year? or the % of the house value at time you inherit it based on the fact £12k represented x% when you paid off his morttgage for him

Emmzi

cleanest way is to leave house in his name and put a charge on it so you get your loan back when it is sold.