gift house to Daughter for completion of mortgage

cliff_view

Hello, I live in a fairly large house on the coast, my wife and I were looking forward to a peaceful retirement, but I suffered a stroke that has caused a complete! change to our plans, I had to stop work before I had completed payments to my mortgage , I am now not able to find! any job. I still have!3 years mortgage left but since my illness, my wife has the only income and she is! nearly 63 and staying at work as long as she can just to pay "interest only" on the remaining mortgage, this becomes fully payable in Nov 2013. we have lived here happily for over 21 years and dread the thought of losing our home after paying for so long and when we are at our most vulnerable.
!
Our Daughter, Son in law and grandson live locally in a small house who dearly want and need to upgrade to a larger property now they have started a family,!but as their mortgage is reletavely new, they can't sell with any hope of!making enough for a deposit for a larger house.
!
My!Question is :- Can we somehow help each other with our individual situations?
Both my wife and I would be glad to transfer/sell !our property to!our daughter as she grew up here and loves it here, our property is valued at about £400,000.00!which puts it way beyond their means, but we would be happy to let them buy it for what they gan afford, with the following terms :- they “take on” !our outstanding mortgage of some £29,000.00, then when they have the remaining value of the bungalow in their name, they then take a smaller size mortgage!than their present house mortgage(which they would sell without much return)! An amount of say £100,000.00 which would be paid to my wife and I.

Our bungalow is quite large with about 3\4 acre of gardens . We would move into the "Granny/guest !annex"! and my daughter and family would use the main house.!!We have looked into equity release companies and dont wish to lose all we have worked for all our lives to their high charges and leaving little for our daughter and family when we both are gone, the above seems an ideal way to help us all, as we would all have sufficient and private living area and gardens we could enjoy our remaining few years in retirement with the added security of our loving daughter being able to "check on us" when we get a little more frail. Also the knowledge that the house continuing as!the “family!home” to my daughter and family.
!
I would be grateful for any constructive help that could point us in the right direction or identify useful contacts. we are aware of risks re future posible issues, but we are a close family and have always been there to help each other.

thank you in advance!
!Cliff Veiw..

Savvy_Sue

Welcome.

I would strongly recommend that you get some independent financial advice about this: it is not as simple as transferring the house / mortgage to your DD's name.

Also, it's a big step to commit to living in such close proximity for the rest of your lives. That grandson may be quite cute atm, but he's going to grown into a hulking teenager - you've been there once, are you ready to do so again? Your need for care may be quite small atm, but putting it brutally, are you expecting your DD to care for either or both of you if they increase significantly? Because even if you're not, chances are that at least in the short term (and quite possibly longer while things are sorted out) that's what will happen.

I'm not saying it can't work. One of my siblings has MIL in a granny anexe, and that seems to work well, but none of us would have our surviving parent living with us ...

Dunroamin

Why can't you just sell your house and buy something smaller with lower outgoings, more manageable and no mortgage?

sebastianj

Cliff view, sorry to hear about your situation and it is normal to think the way you are thinking. You did not say how old you were and whether you are getting a pension or not.
I would suggest that you call your mortgage company and extend your mortgage payment period, they will tell you how long they will extend it for, 10-12 years.
I suggest you ask your family to move in with you and if they are able to rent their house, they should. This way you will see how things work out and make decision accordingly.
Don't decide on gifting the house on terms you described because if your daughter/ son in-law get into debt then you can be thrown out of your own house.
There are many sharks out there and genuine advice is hard to come by.
hope for the best for you.
sebastian

paddyz

Hi Cliff View


If i was you and i wanted to go with having a joint home with your family you really should only sell them a share of your home 29k is roughly 8% then when they pay the additional 100k it will be 33% ect so you have some protection if anything went wrong in the future, also i agree its a very good idea to have them living with you to test the waters first and remember if they split up someone will have to find the money to buy the ex out of the house or everyone will end up finding new accomadation.
Do not simply sell your home for 29k or 129k if its worth 400k, who knows what the future holds and god forbid if either of you needed a care home in later years there will be questions asked about the sale

Is there any way you could use your home to make money? renting rooms out? B&B ?

insured

The safest bet would be to set up a discretionary trust and sell your house to the trust for either £129,000 or a higher figure.
The trust would easily get a mortgage secured on £129,000 if the house is worth £400,000.
Your daughter could pay the mortgage from her own funds and you would repay the mortgage of £29,000 and keep the £100,000.
You could all be trustees and beneficiaries
The arrangement would have the benefit that your daughter would not own the house outright,(in case she divorces, goes bankrupt, has ever to rely on means tested state benefits). You would also not own the house outright (so not be taken into account for care homes)
You would of course own £100,000 but hopefully you would use that to have a jolly good time, and if you ever need residential care you would have spent it.
If you wanted a better home than the LA would pay for, you could perhaps remortgage in the trust if the house still had equity in order to top up LA fees.
Of course for IHT the trust would be ineffective as you would remain beneficiary. However, I don't suppose you mind that.
Daughter could live in your house with family and rent out her bungalow.
Trust would still get PPR when house was sold.
For this sort of arrangement you REALLY need a good solicitor who specialises in this area to set this all up.

Dunroamin wrote: »

Why can't you just sell your house and buy something smaller with lower outgoings, more manageable and no mortgage?

Because daughter wants to live there?