buying percentage of house from parents

stevrich

Hello folks

Think I need to speak to my solicitor re this one but thought I would ask on here to see if anyone can shed any light on it...

My gran past away last January and my mum was the sole person named on the will and got everything left to her (only child). Anyway, she has just recently had the letter from her solicitor stating that my grans house is now fully in her name.

I want to buy it and she also wants me to buy it as it would be perfect for me and my family.

Sadly I can't afford to buy the house as it's valued at £120k.

I can afford a mortgage of ca. £70k so my question is: Can my mum sell me a percentage of the house, say roughly 60% which I would get a mortgage on with her owning the remaining 40%. The plan being is say 15 or so years later I buy her remaining share of the house.

This is in Scotland and I'm currently 27.

Any ideas?

Steven

kingstreet

You could carry out a transfer of equity, but the mortgage would have to be in joint names. You cannot have a mortgage on a property without all the owners being named on it.

ACG

The short answer is no.
I could give a bigger reply but you cant buy part of a property, you either buy it all or none at all.

getmore4less

One option is you buy it off your mum without a mortgage and just pay her the debt over time.

Does she need the money now?

stevrich

Thanks for responses so far. She doesn't need the money right now. she wants to sell so it can go towards her retirement.

What if I were to purchase 100% of the house for £80k, pay down 15%, get a mortgage for 85% then later on in life remortgage and pay back remainder of current value.

Is that... 'legal'?

Steven

getmore4less

stevrich wrote: »

Thanks for responses so far. She doesn't need the money right now. she wants to sell so it can go towards her retirement.

What if I were to purchase 100% of the house for £80k, pay down 15%, get a mortgage for 85% then later on in life remortgage and pay back remainder of current value.

Is that... 'legal'?

Steven

The issue with this is that the difference(in value) is a loan, lenders prefer that to be a gift.

Saying it is a gift when it is really a loan would be fraud.

I suspect this happens in a few cases where gifts are used to buy houses, there is a side agreement to pay it back at some point.

Others may point out deprivation of assets should she need care and potential IHT issues should she have assets over £325k/£650 and die should she make a gift.

ontrack

It's her house to dispose of as she pleases.
Assuming she is not imminently looking at going into care there would be little chance of a local authority being able to look at the asset several years down the line.
If yo want to draw up an agreement to pay her back then I would say it is unlikely to be legally enforceable and so she will be taking the risk.
You could buy the house for 70 k with the risk that if she dies within the next 3 years the taxman may come after you for the inheritance tax on the balance if her estate is over 350 k, but in that case you still would inherit enough to pay the tax!
I would get a mortgage for the 70 k and draw up an agreement for a loan for the balance to your mum. Depends on what the rest of the family think though!

dimbo61

Speak to a solicitor as your mum can gift you the difference between what the property is worth and the amount you can afford to borrow.
Can you afford to repay a mortgage each month and pay mum a set amount every month on top to repay the gift?
Does the property need work to bring up to modern standards ?

getmore4less

ontrack wrote: »

It's her house to dispose of as she pleases.
Assuming she is not imminently looking at going into care there would be little chance of a local authority being able to look at the asset several years down the line.
If yo want to draw up an agreement to pay her back then I would say it is unlikely to be legally enforceable and so she will be taking the risk.
You could buy the house for 70 k with the risk that if she dies within the next 3 years the taxman may come after you for the inheritance tax on the balance if her estate is over 350 k, but in that case you still would inherit enough to pay the tax!
I would get a mortgage for the 70 k and draw up an agreement for a loan for the balance to your mum. Depends on what the rest of the family think though!

It's 7 years for PETs and here would be no(extremely tiny) chance that any IHT would come from the gift as it would use up the nil rate band first.

oh the single person nil rate band is £325k

So many mistakes in so few words.

getmore4less

dimbo61 wrote: »

Speak to a solicitor as your mum can gift you the difference between what the property is worth and the amount you can afford to borrow.
Can you afford to repay a mortgage each month and pay mum a set amount every month on top to repay the gift?
Does the property need work to bring up to modern standards ?

That would be a loan and need to be declared on the mortgage application

stevrich

Thanks for all the replies so far. To clarify, there's most likely no chance of needing care for the next 15 years as she is 'only' 51. I'm thinking she want's me to purchase the house as it's so much easier than having to go through the hassle of doing the place up/getting rid of everything in it etc. The house is in excellent condition and only really needs modernisation decoration wise.

Reading all the responses so far it looks like it could get messy down the line. I don't think I am even happy with under selling me the house as I would feel like I'm doing her out of money should I struggle to pay back the difference. Sadly I think the best thing to do is spend some money doing the place up and selling on the open market.

I'm sure it happens all the time, people wanting to keep a house 'in the family' but sometimes it's just not workable

Steven