My retired mothers interest only mortgage expired - please help! :(

holly_hobby

Well of course HB is means tested, so if they qualified, unlikely they'd have a net estate that would tip them into IHT waters.

I do agree that letting to parents and they claiming HB to pay you rent, whilst permissible in certain circs as discussed , wouldn't morally sit well with a lot of peeps - to which I always try and stick to discussing facts for assistance, and not venture down the moral side of a OPs query/situ - although there have been a few on here over time that do make you shake your head.

H x


H

Dave_the_Ginger_Cat

LondonBoy wrote: »

Ok - so lets take another family. Lets say the parents are 50 and earning 40k pa between them. They have cleared the mortgage on a house valued at 200k. They remortgage to IO and take out 180k. They use this to "clear debts". Lets say one of those debts was to a dear friends company.


The IO term passes, they have no repayment vehicle is place (just a nice tan). They sell up clearing the debt.


The dear friend hears of this predicament and buys a buy to let to house them in. They can't afford the rent so the government pays the rent via housing benefit.


Isn't this just a housing benefit scam and a way to avoid paying inheritance tax?

From a lender's perpsective I cannot imagine anyone being keen to lend 30 years interest only at all, let along well into retirement, and Holly's right about means testing. I think the means testing also looks at recent asset disposal, and there would be serious questions asked about such a transaction.

In any event if the debt were genuinely a debt, it would not be a way of bypassing IHT as it would be repaying monies due. It woudl be avoiding IHT were it a gift disguised as a loan. Not my area of the law, but not popular with the revenue and I know they will actively issue actions for such avoidance.

holly_hobby

Dave_the_Ginger_Cat wrote: »

I think the means testing also looks at recent asset disposal, and there would be serious questions asked about such a transaction.

Only if the asset or its proceeds were given away. In the above scenerio we have a hypothetical IO mge of 180k on a property selling at 200k. So only a max 20k free equity (from which selling, redemption and conveyencing fees may be have to bourne) - which as long as the individual retained the residual sale proceeds, would not be a depreviation of asset exercise for any MT assessment.

Dave_the_Ginger_Cat wrote: »

In any event if the debt were genuinely a debt, it would not be a way of bypassing IHT as it would be repaying monies due. It woudl be avoiding IHT were it a gift disguised as a loan. Not my area of the law, but not popular with the revenue and I know they will actively issue actions for such avoidance.

IHT is assessed on the decds NET (after discharge of all os liabilities/debts) estate.

If they made a loan to AN Other and then die, then the os loan remains a debt owed by the debtor to the decds estate (so will generally increase the net value), of which the executor will administer its repayment, or management under the terms of will (which if the os balance is gifted (not-repayable on the Donors death) it will be assessed as a non-exempt transaction, and included in the valuation of the decds estate.

Hope this helps

Holly

TLOR

holly_hobby wrote: »

Pretty much spot on .....

Issues are OP also wants to pch the property (to be let) on standard residential terms and rates.

H x

Contrary to what Holly implies the OP hasn't approached a mortgage lender, his mother hasn't decided if there are any suitable social housing options, and he certainly hasn't decided on any course of action. He is exploring ALL options, several of which have evolved completely since his mother approached him for help.

He certainly wouldn't be foolish enough to base his decision and the future of his parents well being on one posters advice, no matter how self righteous.

holly_hobby

TLOR wrote: »

He certainly wouldn't be foolish enough to base his decision and the future of his parents well being on one posters advice, no matter how self righteous.

On dear ... you can't please everyone I suppose .....

Unfortuantely the posters advice (which I assume is referring to myself ... ), has been nothing but protective (in highlighting lender issues with suggestions), whilst trying to assist with viable solutions that will work.... and I haven't said a lender for a resi mge has been approached .... yet ... but that does appear to be the detremined intention from the numerous posts and quibbling ....

Unfortuantely the issue seems to be that I haven't encourgaged or guided on how to submit a fraudulent app ... which the OP does seems rather intent on pursuing from their posts ... all at the risk of those he claims to want to help ... !

Although I do have to admit, the self righteous bit did make me giggle ... as when all else fails, you can't beat a good bit of name calling !!!

H

TLOR

holly_hobby wrote: »

With regards to you buying as a resi (to reduce the min deposit) but with the intention to "let" to your parents (inc their claim for HB) .... not really .... refer your earlier post ...



Further confused by you now saying this pch will be your primary residence, and you'll no longer live in London.



Any residential mge can be remortgaged onto a buy to let if the income and LTV is there - or do you mean consent to let (which is a temp tacit agreement of the lender to operate os of resi t&cs) ?

If you are letting your london home (where you work), and buying a house OS of London (which as we know from ealier posts is really for parents to live in), for the lenders point of view, is the distance commutable ? If not, it should ring alarm bells at UW stage, and accordingly may be pulled for referral on a manual underwrite.



Without wishing to appear rude, what your personal opinion is, and what you believe to be, to what occurs are 2 very different points - its important to recognise that.

Indeed I have personally been involved (representing the packager) in court proceedings for a fraudulent mge - its not pleasant for anyone caught up.



I presume this is in ref to your sourcing the deposit and parents later reimbursing you for this.



There is no other legal way than by the book, the only other way, which isn't grey at all, its clear, would be a fraudulent application - which of course would be your choice if you feel this is a non-issue in the greater scheme of things.



Getting oneself in a pickle through poor or ill-informed choices, does not support submitting fraudulent financial applications.



I have no figs on forced possession re unauthorised letting under a resi mge (as a lender wouldn't publish this data).

However the facts remain that to let without the lenders consent, is a breach of your contractual mge T&Cs - to which the lender may take several actions, from penalties and/or payrate loading onto semi-commercial rates (resulting in increased mge payments, which could lead to possession following default), to switching you onto a BTL arrangement (again higher payrate), to demanding redemption of the mge held with them (meaning you would need to remortgage onto a BTL with an alternative lender, within a given time frame - much as Mum has been told by Halifax in her situ).

Of course how you proceed and use the info provided within this thread, is completely your decision - but be careful of any jiggery pokery you may undertake, as I say lenders are MUCH more savvy these days, and much more prone to come down heavy on offenders, bearing in mind a let property has much more risk exposure to them than an owner occupied arrangement.

And given that the majority of lenders are currently trying to reduce their high exposure lending, such as those under CTL arrangements (which are always a temporary arrangement subject to lender reivew, and as such actually designed for accidental landlords, not professional investors or back door BTL apps), they'll probably use your breach as a lucky break to lever you off their mge book.

Given which, I'll repeat that the obvious and practical solution to the issue of homing your parents (following the sale of their home), is to go down the regulated BTL route, bearing in mind you say you have sufficient income (and if you also have sufficient personal deposit to proceed) - but I get the impression that the deposit issue is the killer (hence your venture into a high LTV resi with the intention to apply for CTL - which may in fact be refused due to the regulated nature of the let i.e more than 40% of the dwelling will be let to family (parents).

Lots for you to consider ....

Hope this helps

Holly

Hi Holly,

You raise so many points that are incorrect that I do not intend to respond to all of them. I have tried to remain polite in your responses but please don't attempt to second guess my thought process or my own circumstances, as your assumptions are undermining your obvious financial experience and are starting to make you look foolish.

I understand that you would never consider purchasing a property if it broke the slightest T&C even it it meant your parents would end up sleeping on the streets, that is an admirable stance and I think everyone is quite clear on your position. All that I ask is that you please respect that other people might make a different informed decision, once they have evaluated the risk - especially if their parents are in the plight mine find themselves in.

As I suspected you could not provide a single reference to any repossession regarding the consent to let issue as after a little research others have claimed that not only is this infrequent, it has in fact NEVER happened. It just goes to show that these type of issues are not as black and white as you suggest, after all if that were the case my mother would not have been given a further 18 months to sell the property as she breached the terms of the contract, she would be facing repossession...

TLOR

holly_hobby wrote: »

On dear ... you can't please everyone I suppose .....

Unfortuantely the posters advice (which I assume is referring to myself ... ), has been nothing but protective (in highlighting lender issues with suggestions), whilst trying to assist with viable solutions that will work.... and I haven't said a lender for a resi mge has been approached .... yet ... but that does appear to be the detremined intention from the numerous posts and quibbling ....

Unfortuantely the issue seems to be that I haven't encourgaged or guided on how to submit a fraudulent app ... which the OP does seems rather intent on pursuing from their posts ... all at the risk of those he claims to want to help ... !

Although I do have to admit, the self righteous bit did make me giggle ... as when all else fails, you can't beat a good bit of name calling !!!

H

It crossed the line from protective to assuming my position several posts ago. My position is fluid, I resigned from my position in London 5 weeks ago, my London property has been up for let for over a month. My parents are my priority and I will do whatever it takes to ensure they are comfortable in their twilight years.

You have made numerous assertions that I am intent on committing numerous fraudulent acts which I find deeply offensive. The reason I know you are incorrect is that I haven't decided on anything yet. There are numerous options that I am exploring as now we have 18 months breathing space.

holly_hobby

This thread and the constantly changing positions and contradictions has become sheer utter madness .... !!

Evidenced in just one post by ....

TLOR wrote: »

Hi Holly,

I am currently working in the City and my prime residence is also in central London, my parents live in a rural town which I have been looking to purchase another property in for sometime so I have a base when I go "home". Salary and deposit would not be an issue

Followed today by todays bomb ....

TLOR wrote: »

My position is fluid, I resigned from my position in London 5 weeks ago, my London property has been up for let for over a month.

So its hard to keep up !

I'm however sorry if you feel if I have been unhelpful in anyway, and I have made any inaccurate assertions, which have been due to my obvious mis-understanding of your posts ....

I do wish your parents well ..... and there are solutions to their issue, as already discussed ...

But I feel its time for me to bid this thread farewell ...

TTFN

Holly x

TLOR

holly_hobby wrote: »

This thread and the constantly changing positions and contradictions has become sheer utter madness .... !!

Evidenced in just one post by ....



Followed today by todays bomb ....



So its hard to keep up !

I'm however sorry if you feel if I have been unhelpful in anyway, and I have made any inaccurate assertions, which have been due to my obvious mis-understanding of your posts ....

I do wish your parents well ..... and there are solutions to their issue, as already discussed ...

But I feel its time for me to bid this thread farewell ...

TTFN

Holly x

Again, without knowing the full facts your assumptions look silly, my notice period is 3 months and my last day in the office will be June 30th (minus holiday due). The reason I have resigned (and my Fiance) is because we are/were planning on moving to Australia, my mothers bombshell has obvious thrown a spanner in the works!

As I said my position is fluid, and I am willing to explore all options to help my parents, even if that means postponing our relocation. I have not made any incorrect statement on this thread or contradiction as you suggest, this clearly highlights my point that you should not jump to conclusions or assume peoples position without the full facts at hand.

Your financial advise was excellent and much appreciated as I stated several times.

holly_hobby

Happy travels amigo ....

H