is joint purchase realistic?

Elizabetta

Hello
I am in my late 60's and considering jointly purchasing a property with my adult son. Each of us already owns a property (mine is paid off and he has a mortgage on his). We would like to buy a larger property with space for both of us but that would allow us to make savings on the ever-increasing cost of utilities etc. I understand that the mortgage would need to be in his sole name (otherwise if we apply jointly we could borrow only for a term of about 8 years due to my age). I do trust my son totally but have to consider the feelings of other family members and would wish to protect my capital investment e.g. in the event of my death so that all beneficiaries could inherit without problems. How could I do that? I would be grateful for any ideas about the issues/pitfalls to be considered in the arrangement we are considering.

Let_Us_See

As long as there is no reliance on your income (unless you have a guaranteed income in retirement) then there are several lenders that would accept a joint application. Although you do not specifically mention it, I assume you son will sell his existing property and redeem his mortgage?

To protect your capital investment arrange your proposed mortgage as Tenants in Common (basically, this confirms % ownership), make a separate will confirming your wishes and keep it up to date to reflect any changes in your circumstances.

Elizabetta

Thank you very much for this. Yes, he is planning to redeem existing mortgage. He has enquired of his existing lender (Halifax) and they've said they would only consider "joint" mortgage on term up until I reach 75 yrs. This would involve too high re-payments. I will check out other lenders. You seem to be saying that my age would not be an issue so long as there is no reliance on my income....? Incidentally I do have guaranteed income via private pension. Thanks again.

GMS

You need to make sure any prospective lender is happy with you providing deposit monies, residing in the property and not being party to the mortgage. Many would have an issue with this so ask the question up front to avoid any issues later.

zzzLazyDaisy

Do be aware that if you buy a house jointly with your son as tenants-in-common, and then leave your half in your will to other beneficiaries, your son may be forced to sell the house to free up their inheritances, so you need to work the will carefully if you wish to avoid this.

If the house is bought in his sole name, it is possible to have a trust agreement drawn up to record your beneficial ownership of half the house and have this logged at the land registry. Alternatively, you could have a loan agreement to be repaid on your death, with a charge over the house. Both alternatives potentially create problems for the surviving owner, on the death of the first owner.

You need to seek legal advice to ensure this arrangement is set up properly and in accordance with your wishes.

Let_Us_See

If you have guaranteed income in retirement then they are lenders who will take your income into account if there are affordability issues, and will consider well past 75 years. Also, please consider future affordability, and how your son will maintain the mortgage after your death (it comes to all of us), and where he will live, it your estate is divided up between several beneficiaries.

JimmyTheWig

This is an incredibly extreme plan just to reduce the cost of utilities.

Elizabetta

GMS, LazyDaisy and Let us See, thank you all for your input. There are certainly many points to think about. I think we need to seek legal advice.

Elizabetta

Jimmy the Wig, incredibly extreme? I don't really think so, when you consider that currently we're paying two lots of council tax, gas, elect, phone, broadband, house ins. water etc. etc. Also there will be other benefits as he is away from home a lot, leaving his present home unoccupied. Thanks for your input anyway.

Mojisola

Elizabetta wrote: »

I do trust my son totally but have to consider the feelings of other family members and would wish to protect my capital investment e.g. in the event of my death so that all beneficiaries could inherit without problems.

This is a difficult area to sort out. Would your son be planning to downsize anyway after you die? Would you like to give him some leeway by putting in your will that he has, say, a year before he needs to sell.

What does his will say? What will you do if he dies before you?

If his life changes and a partner comes on the scene, consider how that would affect your life.

JimmyTheWig

Maybe my words were slightly harsh, Elizabetta, but I do wonder if you have done all the sums.

With council tax, for example, you will both currently be getting a 25% single person's discount. When you move you will be paying 50% each. Yes, 50% is less than the 75% that you currently pay, but it will probably be 50% of a higher bill if you are moving somewhere bigger. So you will probably end up paying around the same amount of council tax as you currently do.
Yes, I'm sure that things like gas and electric will be cheaper when shared (despite being in a bigger house) and things like broadband and phone line rental will definitely work out better.

I think that it is a great plan if you want to live together. I don't think it is a great plan to save money if you don't particularly want to live together.

If you are doing it to save money then I seriously suggest that you work out what you will be saving each month and see how that compares to the cost of moving (solicitors fees, estate agents fees, stamp duty, etc).