Buy home for mum

Waswolfdriver

I am a homeowner with a mortgage standing with about 80% Ltv. Mum is a pensioner and homeowner who plans to sell her flat and use the cash together with myself and my brother on a mortgage to make up the difference as tenants in common to buy a bungalow which she will live. What would be the restrictions or hurdles?

poppy10_2

What are the figures involved? How much is the home she owns worth, how much is outstanding on her mortgage and how much does the new bungalow cost?

holly_hobby

Most residential lenders (all but a couple) have a max age at redemption of 75 yrs, so the term will be restricted by mum age (as she will be the oldest mortgage applicant) - which over the max term available, may well make the mge unaffordable or tight on income.

You may think, just leave Mum off the mge to avoid any mge and affordability issues. But the fact that Mum will be both providing some or all of the deposit, for the property, and she will also reside there, will cause possessionary issues for the lender, if they need to subsequently secure a repossession order (due to mge default), and on that basis they won't proceed with the application (either if disclosed at application stage, or only revealled via the conveyencing checks and determination of deposit source).

If of course no mge is reqd, then the fact that the cost of pch is being shared by individuals to be both resident and non-resident, won't matter.

In all cases, you and bro will be suject to CGT liabiilty calcs, on any gain (net of permitted exemptions, reliefs and allowances) realised on later sale of the propery.

Presume Mums net estate will be below iht nil rate band (currently 325k or upto 650k if there is unused spousal relief avail for transfer).

Hope this helps

Holly

Waswolfdriver

poppy10 wrote: »

What are the figures involved? How much is the home she owns worth, how much is outstanding on her mortgage and how much does the new bungalow cost?

Mums flat is worth about £90K, the prospective bungalow will cost about £130K - so a mortgage between my brother and I for approx £40K.

I am the only one who already has a mortgage. My mum is 67.

holly_hobby

Waswolfdriver wrote: »

Mums flat is worth about £90K, the prospective bungalow will cost about £130K - so a mortgage between my brother and I for approx £40K.

I am the only one who already has a mortgage. My mum is 67.

As a mge is reqd, there are 2 main stumbling blocks both including Mum and excluding her from the arrangement - refer my earlier post for details.

Holly