joint mortgage, mother/ daughter

CLAPTON

hodsocks wrote: »

Reason for daughter buying a property at the moment is that she currently works in London and has no chance of buying a property there. She is buying a property here to get a foot on the ladder and also help her old folks with some long term security in a property.
Some time in the future she may want to buy a property of her own to live in, advise from out mortgage advisor suggests that shouldn't be a problem.

there are several problems with this arrangement

1. it is obvious that there may be problems with her getting a mortgage for herself in the future: there may not either but a definite risk: your mortgage adviser is wrong

2. when / if the property is ever sold then she will be liable to capital gains tax on her share

3. her part share will form part of her estate should she die or part of her assets for other purposes (maybe divorce).
So long term security for the parents is not guaranteed.


However depending upon the full circumstances it may or may not be a good idea.

Thrugelmir

Mojisola wrote: »

I took that to mean what would happen if the daughter died and the son-in-law inherited the daughter's part of the house.

This issue can be covered in her will. By gifting her share of the property to the parents.

Mojisola

Thrugelmir wrote: »

This issue can be covered in her will. By gifting her share of the property to the parents.

It could be but we all know that there's many a slip between intention and action.

Thrugelmir

Mojisola wrote: »

It could be but we all know that there's many a slip between intention and action.

Given the "complexities" regarding this arrangement , if were to be put into place, I'm sure legal advice would be sought. So as to protect all parties interest.

Mojisola

Thrugelmir wrote: »

Given the "complexities" regarding this arrangement , if were to be put into place, I'm sure legal advice would be sought. So as to protect all parties interest.

It would be the wisest thing to do.

holly_hobby

As Daughters income is covering the mge, why not both you and wife go on the mortgage with Daughter, as 2nd and 3rd names (upto 4 mortgagors/borrowers are permitted), whilst holding ownership/deeds on a Joint Tenancy (JT) basis (I am assuming of course that you have a clean credit record).

Holding under Joint Tenancy means that upon individual death of a joint mortgagor and owner, their equittible benefit and legal ownership is automatically apportioned to the surviving mortgagors - which will ensure that you and wife keep legal rights until your 2nd death, and it also keeps it out of the estate of the deceased (which will also protect you if daughter pre-deceased either of you). JT also means that upon sale the division of free equity will be on an equal basis.

It's where a property is held under a tenants in common arrangement that inheritance on death is the issue in circs such as this (be that via a will or intestacy regs).

I should be clear that no matter how the deeds are held, all mortagors are jointly and severally liabile for the whole mge debt.

CGT - as this will not have acted as your Daughters main residence from outset, she will be exposed to CGT to a greater or lesser degree, depending upon whether this is her primary residence at point of sale.

Her seeking a 2nd mge later on, is not a forgone by any means, and wholly (as well as a clean credit record of course) depend upon her income being able to support all commitments including the jnt mortgage with you and wife.

But with regards to your present enquiry, please speak to an experienced broker and conveyencer whom should be aware how to manage this effectively.

Hope this helps

Holly

Thrugelmir

holly_hobby wrote: »

As Daughters income is covering the mge, why not both you and wife go on the mortgage with Daughter,

I'm reading between the lines and assuming that there are good reasons for this.

holly_hobby

Quite possibly T (and I did consider this), but thought it worth mentioning just in case they aren't aware/hadn't considered the possibility of multiple mortgagors - which may be a solution (all things being equal !).

Holly x