Acquiring a 10k loan for my grandparents - help please

louby_lou

Ok this may be a long post but i feel I need to lay out the situation so people will understand. My great grandmother has recently been transferred to a home after being in hospital after a stroke. She is 96 years old and both physically and mentally she is declining.

My family situation is rather complicated - my great grandmother had 2 daughters. One is my grandmother, the other (now deceased) mothered a child at a young age and my great grandmother raised her as her own (with about a 15 year age gap between the child (my great aunt) and my grandmother).

My grandmother is severley limited by her own medical conditions, and so when my great grandmother could no longer live alone she lived with my great aunt (the child that my great grandmother raised as her own) since she was like a daughter to her.

So back to the present - my great grandmother is now in a home on respite (with 12 weeks to organise funds for payment to the home). She however does have her own small house. The care home have advised my grandmother and my great aunt that they will require the home to be sold to raise the minimum £21,000 funds which will cover her living costs for the remainder of her life expectancy. In order to facilitate this my cousin (my greedy great aunt's daughter) intends to buy the home from my great grandmother for the cost of £21,000 and then intends to sell it to make her money back and not to mention an extremely tidy profit for them both.

I am not happy with this, as this means that my grandmother will be left with absolutely no inheritance and no funds to support her and my grandfather while my frankly mean and greedy cousin who has never cared for my great grandmother except to take from her, and my great aunt who only sees my great grandmother as a meal ticket - will benefit from the property.

So the proposal is this - I am a student in my final year of university - however I am in the proceeds of obtaining a job in a large corporation for £28k a year. I am at the last stage of completion and should have my confirmed offer very soon. I only mention this as I thought that it might be a factor which a lender might take into account. Of course if i do not obtain the job this whole question may all be futile, but while there is a spark of hope i would like to try.

My grandparents live in rented accommodation and have no funds of their own, my own parents are able to obtain absolutely no credit (they have a terrible credit rating due to the failure of a business and defaulting on credit cards etc) - but I have a very good credit rating. I have credit cards with not enormous balances - I have never missed payments and upon checking my rating approx 6 months ago it was perfectly fine.

My proposal was that I attempt to obtain a loan from somewhere for the sum of £10,500 using my prospective job as possible leverage? I am totally unaware as to the factors which will be taken into account so I would really appreciate any help anyone could give me. So with this £10,500 i propose to give this money to my granparents so that they can afford to purchase half of the house from my great grandmother. (can anyone advise me as to how this may be done efficiently and whether any charges would apply?)

This would mean that a joint ownership of the house would allow my grandmother to receive half of the inheritance which she is entitled to. This would be sold in the future and the profits halved. No one is disputing that my great aunt should not receive half of this (she is merely using my cousin to purchase the property as she would not be able to obtain credit on top of her large mortgage) - i believe they both should receive half as they have both lived as her daughters all their lives, and i believe my great grandmother would want it so. her will states as much however she is not of sound mind to reiterate her wishes. What i do contest is that my grandmother should not receive anything as my grandparents live such a meagre lifestyle now i could not bear for them to lose the prospect of being able to live a better life.

Can ANYONE please offer me any advice as to how we may resolve this problem? I can only see the loan taken out in my name as a means of raising money for them to purchase. Of course they would repay the loan in full as soon as the house were sold (they anticipate in 12 months time) and they have agreed to pay all interest themselves in some way. I would not receive any money, and nor would I want it.

I just don't know where to turn with this and I can't bear to see my grandmother cry because she thinks she will be left with nothing to help secure her future which my greatgrandmother always promised her.

Thank you so much for your time in reading this and if i haven't been clear please let me know i would be more than happy to clear things up if i have rambled.

Many thanks,

Laura

tanith

Surely if the lady has a will once the care home costs are paid there is a mechanism to make sure the wishes of the will maker are carried out ie: the residue of the estate will be given to whoever she has bequethed it to..

Its complicated I agree I am sure there will be someone who know all the legal implications of this..

tyllwyd

Would it be easier to find a company that would be able to give a home equity release type loan based on the value of your great grandmother's house, which she could use to buy an annuity. Then when she passed away, the company would have to be repaid out of the estate, but the rest could be split between the remaining family according to your great grandmother's will.

tyllwyd

Another thing to think about ... what happens if the care home costs are above £21,000? I don't know how closely they look into these things, but if the authorities discover that she sold a house worth £120k (say) to a family member for only £20K, they are not going to be happy. Would there be a possibility that they might then try to recover the money from your cousin?

I can't help thinking that there must be people out there who would pay more than £20K for the house, especially a builder/developer who might have access to cash quite quickly. Has anyone talked to a local estate agent or thought about putting it up for auction?

Does anyone have power of attorney over your great grandmother's affairs if she is of unsound mind to make these decisions?

sukey13

I imagine that the care home costs are £21K per year unless she has no assets, then the government pay. £21K for her life seems v. cheap when it comes to full time nursing care.

If either you and your grandmother or the greedy cousin buy the house cheaply this will be seen as tax evasion and one of the questions asked when you buy property (particularly below market value) is are the seller and buyer related in anyway.

Really the person's whose house this is needs to make a decision, or if your grandmother is non compus mentus then it becomes even more difficult as a court will decide on her behalf (unless she already had an enduring power of attorney arrangement set up - may be written into her will?)

You cannot decide for her who will buy the house or if indeed it is to be sold.

If the owner of the house decides to sell to a)cover nursing costs or b)to lose the money (by selling cheaply) so that the government pay the costs of care - probably not best for you as you would all lose your inheritance they need to either a)sell on the market for the best price possible or b) sell bmv and fast to one of the many property buying companies out there (watch out as there are numerous unreputable ones who charge for this service).

Some companies offer sell and rent back options so that if someone else (I am not sure if your great aunt or other grandmother lives in that house) they wont lose the roof over there head.

At the end of the day it is up to the owner of the house what and if they want to sell and to whom for what price.

I think that selling on the open market will take on average 7 months, property buying companies can complete in 3 - 5 weeks or faster.

IF the nursing costs are 21K a year and she lives to be 100 that would be £147K - so it looks like there may be no money left if the house is sold.



P.S. Sorry if I have the people involved round the wrong way it was a long post and quite confusing. Unfortunately I get to speak to numerous people in situations like this everyday.

louby_lou

oh thank you so much for all your replies. i was so clueless about this before. i have been on the social services website and i have seen just why my aunt told my nan that the house needs to be sold for that amount. if your assets are above 21k then you have to pay your own fees from the proceeds of your house. well thats certainly fine by us - its my great grandmother's money and she should live off it she's earned it! however i now know my aunt wants to sell the house so that my great grandmother appears to have no assets and gets free care, in the meantime she can make a tidy profit on the house! we had no idea that this was the case and quite right yes it is tax evasion! i had no idea of this and would certainly not want to raise the money for such a thing.

i cant believe that she would go to these lengths and also persuade my grandmother that this was the only recourse! she told my grandmother that the care home just consumed all profits from the house, well that may be - god willing my great nan lives long enough to use them, but i'm sure she can't bear the thought of all this money which she had her eye on for so long would be spent on care.

has anyone had any experience with care homes? as i understand from the literature which i have been reading the financially assessed costs are deducted from the person who is being cared for monthly by direct debit, and then should the person pass away while funds remain - the remainder is split in the way in which the person's will instructs.

its infuriates me!

thank you so much for help so far everyone!

xxxxxx

Robert_Sterling

I had to draw up a family tree to be able to see who was who.
You asked your question in the right place and you got the right answer.

EdInvestor

What should happen is this:

Let us say the cost of the care home is 20k a year.

Great grannie's pensions,plus Attendance Allowance (council) nursing allowance (NHS) will be added up.Perhaps they will come to around 10k a year in income.So she will need an extra 10k a year on top to pay for the care.

What you can do is to sell her house and use a portion of the value to buy an "immediate needs annuity". This means that you use a lump sum to generate a tax free income which pays the additional cost, guaranteed for life.

Because great granny is very old, sadly she will probably not live for much longer, and thus the cost of the annuity is quite cheap, considering the guarantee. It should still leave quite a lot left over from the house sale as an inheritance for your grandparents ( or whoever else great granny has mentioned in her will.)

If the house has not been sold after 12 weeks, the council will usually keep paying the extra costs and take a "charge" on the property to prevent anyone selling it and making off with the proceeds, or organisaing any arrangment like the one your cousin seems to have in mind. (The council has seen this kind of thing before, of course, so that idea will not work.)

But depending on how much the house is worth, it's unlikely the care will eat up all the money if you cap the cost with one of these annuities.