Owning house parents live in - can equity be released?

ihatebarclays_2

Hello,

A relative of mine has a property question. I don’t know of an answer so am wondering if anybody here has any ideas.

Briefly: My relative bought a house some years ago for her parents to live in, rent-free. She owns the house outright but has never lived in it herself; she has her own (mortgaged) house.

Her elderly father still lives in the house, the mother having died recently.

Now my relative is wondering whether it is possible for her to realise the money she has in the property while allowing her dad to continue living there. So she basically would like some sort of equity release scheme,but as far as I am aware normal ER schemes would not be applicable here. Is there anything similar she could do, or does anybody have any other ideas?

It seems to me she is probably asking for the impossible, but any suggestions would be gratefully received. She doesn’t actually need the money as such, and I would have thought that even if such a scheme were available, it would likely be a poor investment for her, especially as her dad is old and not in great health.

Thanks in advance for any suggestions, or even just for confirmation that there isn’t much she can do in this situation.

Werdnal

There are good an bad Equity Release schemes, so she woul dhave to investigate thoroughly to ensure she find something legit, but not sure of the implications of her not living there.

Would she be able to get a mortgage? It would have to be BTL terms as she is not resident, but worth looking into.

Best bet would be to approach an Independent Financial Advisor to look at her specific needs and finances and give her tailored advice.

Or she could always buy something smaller and more suited to her Dad's needs, allowing him to downsize and sell the existing property.

theartfullodger

Don't think (not 100% sure..) you can do equity release on someone else's home...

A But-to-let mortgage may have conditions about not allowing relos to live in the place or having "normal" AST's with market rent..

Tricky... not sure there's a way out... unless...

- father moves to live in another property owned by someone else & rent (normal) is paid (and possibly HB/LHA paid ...)
- current house is let on normal AST: use AST income after expenses & income tax paid (oh yes.!!) to assist father...
- then get B2L mortgage on current house & spend it on whatever....

Problem with starting to charge rent to father now is it would likely not be accepted for HB/LHA as it would be a "contrived" tenancy...

Anyone else got cunning ideas??

ihatebarclays_2

Many thanks for the advice, much appreciated.

kingstreet

She needs a regulated BTL remortgage. It's regulated because the property is more than 40% occupied by family members.

A whole market mortgage broker is the best option for such a product.

Maximum loan to value will be 75%ish.

crazydoglady_2

Did you end up getting this worked out - curious what the outcome was (have a similar situation)?

Yorkie1

crazydoglady wrote: »

Did you end up getting this worked out - curious what the outcome was (have a similar situation)?

Given that the first post was less than 48 hours ago, I suspect that they haven't had the time yet to "get this worked out and have an outcome" ...