Advice wanted for separated couple looking to buy a second property...

wearethedogs

Posting on behalf of a friend. Any advice or comments would be appreciated:

Mother and Father seperated over a year ago, although still married & no real intention or reason to divorce.

Father 58 years old. Self employed. Consistantly earns £26 000 - lives in the family home. At a guess worth around £250 000 with £30 000 left on the mortgage.
Mother 52 years old. Employed. Earns £21 000 - currently renting at £550 PCM.

Between the parents, they want to buy a property for the mother. Looking at somewhere in the region of £90 000 - £100 000

Considering age, income and the value of the properties; are they likely to be able to get a mortgage for the second property / remortgage first property to cover the cost of the second or somehow secure the finace to buy the second property.

I accept that they will probably need to visit an advisor, but wonder whether anyone has a view on whether this is feesible.

Cheers.

holly_hobby

yes you will need to see an adviser to assist with sourcing a suitable lender.

But generally, you may purchase a property for your Mum, under a dependants relative mortgage. Your income shall obviusly have to be sufficient to service all commitments, you will need a deposit, and if you charge Mum any payment in respect of rent, this needs to be declared to HMRC for assessment.

OR

You may remortgage your own property to raise capital to purchase the property outright (max available subject to income as discussed).

In either case upon disposal of the property any gain will be subject to a capital gains tax assessment, with liability based on the net gain following the application of all applicable reliefs and allowances.

I am no sure whose Mum this is, but as you are seperated, if may well be worth considering the impact of the death of the sibling to Mums protection - as the surviving "spouse" may well choose to sell the property and where would that leave Mum ?

A good way would to avoid this would be to purchase the property for cash, in the name of all 3 of you - Mum, Yourself and Your ex. Thereby Mum does have some protection of her interests if her child pre-deceases herself. ( effect purchase as tenants in common, whereby both Mums and the childs share could rever to each other upon their death).

So there are options, but it may be complex (due also to the fact that your ex is not resident in the property to be remortgaged), and you do need a brokers assistance.

Hope this helps get you started ...

Holly

CLAPTON

without knowing the full circumstances but they would be better to consider a complete financial separation; 58 &52 is still very young with maybe 30 or more years left to live and enjoy life.
being tired financially together will be very restrictive

best to consider selling the existing property ; divide the spoils and buy whatever they have left plus a small mortgage each

wearethedogs

Holly, I believe you may have misunderstood. It is the mother and father who have separated and ideally the sibling would not be involved. The son who earns approx 21k could be involved but is looking to buy a property for himself near where he works (too far away to share with mother or father) so it is probably best that he stays out of the situation.

Thanks Clapton. Clearly divorce and splitting assets is one option, however ideally the father would be able to stay in the family home. (Without wanting to over-complicate, the father is a sole trader and the family home includes the fathers work-shop). The mother is happy for this to happen as long as she is able to buy a house for £100 000 between them.

CLAPTON

wearethedogs wrote: »

Holly, I believe you may have misunderstood. It is the mother and father who have separated and ideally the sibling would not be involved. The son who earns approx 21k could be involved but is looking to buy a property for himself near where he works (too far away to share with mother or father) so it is probably best that he stays out of the situation.

Thanks Clapton. Clearly divorce and splitting assets is one option, however ideally the father would be able to stay in the family home. (Without wanting to over-complicate, the father is a sole trader and the family home includes the fathers work-shop). The mother is happy for this to happen as long as she is able to buy a house for £100 000 between them.

has she really thought through the next 30/40 years of her life (that's probably longer than she has been married)

suppose she (or he ) meet another partner? this could cause major complications if both houses are owner jointly

however it makes sense to visit a mortgage broker to see what is possible given their ages and income

maybe, husband can increase his mortgage to provide a substantial deposit for mum who can then get a mortgage to buy

holly_hobby

sorry I mean to say child not sibling ... too much egg nog !

The rest of the post stands re sourcing, tax, protection arrangements for Mum should her child die and their survivor wish to sell the property from under her ..

Personally, due to the marital circs, I think an arrangement such as this is fraut with potential issues. The main one being unless a cash purchase (tenants in common), this arrangement holds no security for Mum, or piece of mind for the child (if they pre-decease Mum).

Why do they want to pch a property for Mum in the first place ?

Holly