Releasing Equity to purchase another property

Fire_Fox

breadlinebetty wrote: »

You're wrong, Fire fox. Again.

Housing benefit pays both rent AND mortgage interest.

So you're not on your own with a mortgage - so stop trying to pretend otherwise.

:rotfl: Do your homework before posting absolute rubbish, dear. :rotfl:

"Housing benefit and support for mortgage interest (SMI)
Housing benefit only covers rent payments, so you can't claim housing benefit to pay your mortgage.."
http://england.shelter.org.uk/get_advice/help_with_housing_costs/support_for_mortgage_interest

"Mortgage or owned outright
Mortgage or owned outright - people who own their home outright or have a mortgage - are not eligible for Housing Benefit. However, help is available for some people to help meet the cost of interest payments on their mortgage. In order to get this help you must be claiming Income Support, JobSeeker's Allowance (income-based) or Employment and Support Allowance (income-related)."
http://www.turn2ushelp.entitledto.co.uk/viewhelp.aspx?sid=13&ctyid=0&helpfile=HousingStatus

andy.m_2

The most obvious questions are also the most unsavoury.

How compus mentus is your father?
How well is he generally?

Is there a time period after the RTB has been invoked that the property is not transferrable?

Are there any other siblings?

Mrs_Imp

One scenario is this:
You release the equity in your house and gift the money to your Dad to buy his house.
He will have to pay for his own maintenance and repairs. Does he have this kind of money?
Your Dad ends up in a care home at some point in the future.
His house will be sold to cover the care home fees, and you won't see your money back.

It doesn't sound like a good use of your money to me. Use the 26k to take your Dad on some nice holidays and days out.

HAMISH_MCTAVISH

1. Borrowing money against your home is perfectly legal. If you can do so without the bank requiring it is spent in a certain way, ie, on building an extension, then that's fine.

2. Gifting money to your father for him to buy his house is perfectly legal.

3. As he will then own outright, he could put the house in a family protection trust to avoid probate expenses. This then has the side benefit of making the asset untouchable for care home fees. The cost is around 2.5k.

4. Upon his death the trust will transfer ownership to the heirs.

This seems like a lot of effort for a house only worth 50k though, and as has been mentioned, he'd need to cover maintenance liabilities while he's alive.

Mrs_Imp

HAMISH_MCTAVISH wrote: »

3. As he will then own outright, he could put the house in a family protection trust to avoid probate expenses. This then has the side benefit of making the asset untouchable for care home fees. The cost is around 2.5k.

4. Upon his death the trust will transfer ownership to the heirs.

Just be careful about doing this. Some Councils want their discount back if the house is sold within a certain number of years of purchase. Also be careful that putting the house in trust does not count as your father trying to dispose of his assets, in which case it may still be taken into consideration when calculating his care home fees liability.

OP - there are a lot of implications of what you're wanting to do. You really proper, legal advice. And would your Dad really want you to risk losing 26k

HAMISH_MCTAVISH

Mrs_Imp wrote: »

Just be careful about doing this. Some Councils want their discount back if the house is sold within a certain number of years of purchase. Also be careful that putting the house in trust does not count as your father trying to dispose of his assets, in which case it may still be taken into consideration when calculating his care home fees liability.

OP - there are a lot of implications of what you're wanting to do. You really proper, legal advice. And would your Dad really want you to risk losing 26k

It can certainly be set up in a way where the risk of losing anything is negligible, but you're right, the op should take legal advice jfrom a specialist who deals in this area.

The other option of course is to arrange a private mortgage from son to father, with a charge against the house, as the council claim would be secondary to any mortgage payoff.

But the trust is probably simpler to arrange, and provided its done right, there is virtually no chance of it being successfully challenged by the council.

The key criteria are usually that the applicant is in good health, and that the primary purpose of the trust is for another purpose such as avoiding probate fees, rather than depriving the council of assets for care costs.

Loopgames

Why does everyone think old people will always end up in care homes. Doesn't anyone plan on looking after their parents anymore?:(

Mrs_Imp

Loopgames - I would love to look after my parents when they get too old to live by themselves. The unfortunate reality is that our house just isn't big enough. Even if we combine the money from our house with the money they'd get from selling their house, we wouldn't be able to get anywhere It makes me a bit sad really.

chewmylegoff

DadsHelper wrote: »

Hi I am new to this and am seeking advise on how to help Dad purchase his housing executive house under the right to buy scheme.

Dad is 72 and currently in receipt of pension credits and DLA.

His house has been valued at 50K and has been awarded 24k discount.

How can he raise capital at his age?

We have a mortgage on our home valued at 195K, 40K is the outstanding amount left on mortgage.
We don't want to remortgage as we have a very good interest rate (1.09%)
Our bank has offered us equity release of 30K @ 3.29%. BUT we have told the bank it's for home improvements. ;)Can we use this money and lend it to Dad? Also can Dad then claim the interest in the form of housing benefit which would be used to pay off the 30K?

Any help or ideas would be much appreciated.

so we can see how you can make money out of this - i.e. borrow the money at 3.29% and your dad pays you a higher level.

how would your dad be financially better off as a result? surely what matters is his financial position? why does owning his own home at this age when he has not before make him better off?

spenceeyftb

I think you'd be much better off re mortgaging yourself and having your father live with you. Use the money to adapt the house for him and if possible build extensions so your not under each others feet all the time.

This is my plan in the future. No way I'd see my parents in a home.

Same goes for my wife's parents. It would be a squeeze but I'd rather live like that.