Complicated mortgage - advice please

mrsdunny207

We are thinking of moving into a property with my parents.

My parents would sell their property to fund the bulk of the purchase and one we have seen is a large dwelling with an integeral annexe. We would also sell up and put money into the new house.

OK - here is the complicated bit. My parents have no mortgage and my dad is 74, we do have a mortgage and whilst would generate some equity in the sale we would like to 'port' some of our mortgage across.

If all names are on the deeds of the house I don't think we can get a morgage because dad is too old (well according to Northern Rock). Now if they have put a load of money in they would need to be on the deeds wouldn't they?

I will talk to an IFA but any advice / thoughts would be appreciated!

Thanks

Thrugelmir

Are your parents intending to gift you the entire equity in their existing property? Or do they wish to retain control.

mrsdunny207

Thrugelmir wrote: »

Are your parents intending to gift you the entire equity in their existing property? Or do they wish to retain control.

Not all (I have a brother and there would need to be consideration for his share) but they would be putting in about 75% of the property costs without expecting us to pay anything back.

holly_hobby

The main issue with this is that your parents are provding a large deposit off the mge, but can't go on the deeds, as you need a mortgage/ to port your existing mge (NB - "porting" relates to the mge product/rate only not the actual borrowings, of which your new mortgage will be subject to full underwriting on the whole amount, just as any new mortgage application is), and your parents are too old to obtain a decent term with your current or the majority of residential lenders.

Even if they agree not to go on the deeds, and donate the monies as a gift for the deposit - lenders will want to know the source of the deposit, if revealled that the same "Donors" are also to reside in the property - you have issues re equittible ownership rights as a result of the "gift" - which lenders don't like in respect of security and possessionary rights.

As in essence the "gift" isn't without reservation, but as a trade off for your parents occupancy.

So before you go down the track with this, you will need to ask your current lender how they would feel about the "gift" from your parents, and their residence inthe same property. If agreed with your lender, they will need to sign a consent to vacate declaration, which is required where there are residents to the property over the age of 17, whom are not party to the mortgage - so absolutely bog standard and nothing to worry about.

Of course, your parents will have no legal ownership of the property, notwithstanding any trusts/will provision that may be effected - which they may not be too comfortable with.

If your lender refuses, or your parents want to be on the deeds, there may however be a way round this, iin securing a joint mortgage (as jnt tenants for auto transfer on death to survivors, which I gather from your post is agreeable, as oppossed to a tenants in common arrangement), with a mge lender whom does not have a max age at redemption (of which there is 1 residential mge lender I am aware of). Generally up to 4 names may be party to mge deeds and a mge, although not all 4 incomes will be taken as a whole and mulitplied up (generally max of 3 + 1 +1 or something similar).

Could this be a solution, if your own lender is not happy with the "gift" and residency, or your parents want some legal recognition ? If so, term assurance (in trust to speed probate for the survivor/s) is essential on you and your hubby, as the mortgage repayments on based on your income, but the responsibility of all mortgagors, which means it will fall to those remaining mortgagors following the death of each individual ... and you could beat your Parents to it .. leaving them in a very sticky situation !!

This is aside to all parties ensuring that their wills are upto date, any estate/IHT planning has been addressed, and those upon whose incomes the mge is based have sufficient payment and CI protection in place (to protect the interests of all), in addition to the Term assurance discussed above.

There could be deprevation of assets issues re any application for state funded long term residential care, but I am guessing your taking care of your parents is behind the motivation to have sought a joint move to a property with annex accomodation. If this is not the case, and they are not on the deeds, any requested local authority assistance to costs will be affected by the disposal of your parents home - so some LTC provision may be required from your IFA.

Its a little complex, but there are solutions (subject to satisfying status), and an experienced WOL mortgage broker andan IFA will both be well equipped to assist with your mortgage and product, estate planning requirements, withr alternatives that are not openly discussed on a forum ....

Hope this helps

Holly

mrsdunny207

Thanks so much Holly for your really comprehensive reply. I'll review properly but I appreciate the options you explained!

Conrad

mrsdunny207 wrote: »

We are thinking of moving into a property with my parents.

My parents would sell their property to fund the bulk of the purchase and one we have seen is a large dwelling with an integeral annexe. We would also sell up and put money into the new house.

OK - here is the complicated bit. My parents have no mortgage and my dad is 74, we do have a mortgage and whilst would generate some equity in the sale we would like to 'port' some of our mortgage across.

If all names are on the deeds of the house I don't think we can get a morgage because dad is too old (well according to Northern Rock). Now if they have put a load of money in they would need to be on the deeds wouldn't they?

I will talk to an IFA but any advice / thoughts would be appreciated!

Thanks

For an experienced broker this is all doable. Beware because some will mess this up and there's then no way back.

The sorts of thing that will trip up an IFA (an IFA is by definition not a dedicated mortgage specialist) and many a mortgage broker is the fact the property contains an annex. An experienced broker knows how to approach a lender regarding such matters.

Whatever you do, do not use one of the call centre type brokers, it WILL fail.

Good luck.

mrsdunny207

Conrad wrote: »

For an experienced broker this is all doable. Beware because some will mess this up and there's then no way back.

The sorts of thing that will trip up an IFA (an IFA is by definition not a dedicated mortgage specialist) and many a mortgage broker is the fact the property contains an annex. An experienced broker knows how to approach a lender regarding such matters.

Whatever you do, do not use one of the call centre type brokers, it WILL fail.

Good luck.

Thanks so much Conrad - how would I go about finding an experienced broker in the W Sussex area (if being local to the property is important)?