Buying my parents home, but renting in back

Hennean

Hi
My parents want me to buy they house ( they own it outright ) and then rent it back off me

The house is valued at 100k

I only earn £20k a year so would struggle to get the whole loan

Is it possible to buy 80% of the house ?

I'm also told if I buy the house its a problem if they still life there legally, please could someone explain this too

thanks

cte1111

You could look at getting a mortgage for £80,000 with the remaining £20,000 as a gifted deposit. It might be an idea to use a mortgage broker as their knowledge could help you find a lender who would accept this.

In order to answer the rest of your query, we really need to know the purpose of the purchase and rent back scheme.

Alter_ego

If parents are on any means tested benefits £100k in the bank would be a problem.

Hennean

I work abroad so don't need a house for 48 weeks of the year, just a place to crash when I'm home

My parents health is not great and will need to go into a home in a few years

I think they just want to live there for a few years then I'll rent it out.

I'll look into the gift idea as this is something that may work until my salary goes up next year

Hennean

Not receiving benefits

GMS

Not something a lender is likely to want to do. Gifting equity and remaining in the property in completion will cause issues fore the lender in the event of repossession.

Aside from the fact it would become a regulated Buy to Let.

Are you a UK taxpayer? If not it will be another issue.

Likely to be a non starter

tutington_2

wow so you - as a family - are willing to give the lender approx £50K for a 25-year mortgage for a 100K property that is owned outright by the family? I fail to understand the logic behind it... but perhaps I'm missing something.

why don't they just gift it to you now and you agree to let them live there rent free for life, or something like that?

Alter_ego

Hennean wrote: »

My parents health is not great and will need to go into a home in a few years

It's likely that the house value would be assumed to be in the bank if they try for Local Authority funding for this

Hennean

Im sure they would like to blow a fair chunk of cash on holidays for the over the next few years ,,, and Im all for that

what about how to buy to let ?

Alter_ego

Hennean wrote: »

Im sure they would like to blow a fair chunk of cash on holidays for the over the next few years ,,, and Im all for that

In that case try googling Deprivation of assets.

holly_hobby

Putting to one side the effect of capital on any meants tested benefits, and deprivation of assets (which is in relation to long term care, and if parents at point of sale, have reason to reasonably suspect they will require future long term care provision).

Moving to the mortgage.....

No BTL lender will agree to a sale and rent back purchase - period.

You may think , well I won't charge mum and dad rent and that'll get round the rent back point. The issue you still have is that as parents will remain resident post completion, the lender and conveyencer is prevented in obtaining vacant possession and essentially parents have beneficial interest. which will restrict any possession order of the lender - so that again means lenders won't be interested.

So this is a complete no goer.

If they want the capital, they need to sell up and go into alternative rented accomodation.

Hope this helps, if not music to your ears (sorry !)

Holly x