Mortgages - Helping Parents??

Dave_Ham

There are loads of considerations and one suggestion (from someone not really qualified-no offence meant) does not make the idea practical.

There are way too many considerations, least of all the deposit which will make this untenable.

How much are your parents earning? (last time of asking as will give it up after this...)

holly_hobby

mc. wrote: »

Well I suppose my main query was whether there is any way I could help them without running the risk of ruining my chances of getting my own mortgage in the future?

If you mean without this mge being taken account when applying for your own mge - no

mc. wrote: »

You are quite right in that they may not even need my help - that would be great - but given their ages and the fact that there jobs are not completely dependable it seems unlikely that a provider will offer them a mortgage with a term long enough so that they could afford the repayments (probably 20 or 25 years to be honest) or do you think that could be achievable?.

There are a couple of lenders whom don't have an upper age ceiling of 75 yrs (which naturally restricts term for the older applicant), however income during retirement must be acceptable and assessed as sufficient to support the mge througout its term.

mc. wrote: »

I like the buy to let idea, does anyone know of any providers that would allow let to family at all? My grandmother could transfer her small house to my name which might solve the problem of me having to already own a residential property? I hear that's a good idea anyway nowadays in case of ill health.

This would be a regulated buy to let (as more than 40% is occupied by family). The number of lenders paddling in this pool is not huge due to the regulated nature and requirements, whilst your affordability is assessed on earned, not rental, income (as with typical unregulated BTL applications).

Your granny transferring her house to you, may cause future issues re any requirement for state assisted long term care provision, may (depending on several areas of assessment) be cited as deprivation of assets by the local authority, and treated as never haven taken place in her finanical assessment. So tread carefully with that one.

The obvious and easiest solution here, is for parents to apply for their own residential mge (subject to status) with a lender whom offers a more flexible redemption age. A mge broker will be aware of the lenders in this market.

Hope this helps

Holly

PollyOnAMission

Dave_Ham wrote: »

There are loads of considerations and one suggestion (from someone not really qualified-no offence meant) does not make the idea practical.

There are way too many considerations, least of all the deposit which will make this untenable.

How much are your parents earning? (last time of asking as will give it up after this...)

From the original post:

Parents combined income: mid 30s (pretax)

BeckyMellor225

so they are looking to borrow £200k less deposit of £40k so £160k on a combined income of mid 30s? That's a multiplier of maybe 5 times joint salary - for a couple where one is 50 years old.
Am I missing a fact that makes that sound doable?

Dave_Ham

PollyOnAMission wrote: »

From the original post:

Parents combined income: mid 30s (pretax)

Mid thirties is a bit broad for this situation, as I believe that this could well be achievable but it will be very tight.

There is no merit in the OP getting involved if Parents can achieve on a repayment basis in their own right - which I believe they possibly can..

mc.

holly_hobby wrote: »

This would be a regulated buy to let (as more than 40% is occupied by family). The number of lenders paddling in this pool is not huge due to the regulated nature and requirements, whilst your affordability is assessed on earned, not rental, income (as with typical unregulated BTL applications).

Your granny transferring her house to you, may cause future issues re any requirement for state assisted long term care provision, may (depending on several areas of assessment) be cited as deprivation of assets by the local authority, and treated as never haven taken place in her finanical assessment. So tread carefully with that one.

The obvious and easiest solution here, is for parents to apply for their own residential mge (subject to status) with a lender whom offers a more flexible redemption age. A mge broker will be aware of the lenders in this market.

Hope this helps

Holly

So if I understand I would have to prove I could pay for the mortgage assuming no income from rent. That makes sense.

What are the consequences of the transfer being cited as deprivation of assets by the local authority? Do they have the right to reclaim it after it is transferred, and if so does that right not expire after a set amount of time?

It is good to know that there are lenders who offer that, *fingers crossed* it would make life much easier for me! (whether it's a good idea at all is definitely debatable)

Dave_Ham wrote: »

There are loads of considerations and one suggestion (from someone not really qualified-no offence meant) does not make the idea practical.

There are way too many considerations, least of all the deposit which will make this untenable.

How much are your parents earning? (last time of asking as will give it up after this...)

I am assuming you are suggesting that the deposit would be higher for a BTL mortgage? In that case this solution I suppose would only be possible after several more years of saving from them! In the long run though it seems like it would probably be wiser than them having their own mortgage to worry about potentially into their own retirement. Any thoughts?

As Polly rightly pointed out their combined income is in the region of the mid 30s.

Thanks all!

mc.

Dave_Ham wrote: »

Mid thirties is a bit broad for this situation, as I believe that this could well be achievable but it will be very tight.

Unfortunately I don't know any more exact than that, I could find out but any number I do give is pretty likely to change, given their jobs.

Restaurants seem like they close at a moments notice! As for a part time job, their needs could go down or indeed up.

holly_hobby

mc. wrote: »

So if I understand I would have to prove I could pay for the mortgage assuming no income from rent. That makes sense.

What are the consequences of the transfer being cited as deprivation of assets by the local authority? Do they have the right to reclaim it after it is transferred, and if so does that right not expire after a set amount of time?

It is good to know that there are lenders who offer that, *fingers crossed* it would make life much easier for me! (whether it's a good idea at all is definitely debatable)

DOA - if the individual applies for state funded care within 2 yrs, DOA can usually be sucessfully cited by the Local Authority (LA).

After 2 yrs and as time goes on between the 2 events, its harder for the LA to prove DOA, but they will still attempt this if they believe the individual:s actions were made to off load assets to solely qualify for state benefits - so in essence there really isn't a cut off point as such.

If DOA is proven, what happens is that the LA assess the individuals financal status including the value of the DOA, be that a cash gift (which affects any application for MT benefits), or in this case (and as a single owner) the value of the property (relevant for LTC applications)

Which essentially means that her claim for assistance may be rejected, and she/family would have to fund her care costs if they didn't want to explore local authority care homes (which many don't for obvious reasons).

mc. wrote: »

I am assuming you are suggesting that the deposit would be higher for a BTL mortgage?

Yes 25% reqd for a first time landlord.


Hope this helps

Holly

Dave_Ham

Sorry, you misinterpret my point.

Your parents cannot provide you the deposit (gifted) for a buy to let purchase that they will live in. Way too many barriers.

Get some formal advice as would fancy this is achievable traditionally...

bigadaj

OP what do your parents do? If they are public sector then a final salary lump sum payment can be used as collateral against an interest only portion of a mortgage which might bring down payments as well as affordability. Might not be the case for you and this obviously removes a sum of money in future but just a thought.