Joint Ownership with parent - splitting up

torro_2

Hi there, did a search of this and couldn't find any information.

I live in a property with my parents - worth £500k. We have joint ownership and mortgage (me and father) and have £60K left on the mortgage. My disabled brother lives with us and he is claiming disability benefits as he cannot work. We live in London.

I have a wife and a child. My savings are pretty poor (about £10K).

Circumstances have changed and we are looking to move away from my parents. I want to buy a property with a salary of £50K - was looking at help-to-buy but as I am on the property ladder already I assume, I can't apply (if I'm wrong, do let me know). I could probably be eligible for a new-build if that was the case.

Therefore, I guess the only route would be to remove my name from the current house and mortgage to make me eligible. However my dad and mum are in their early 60s. I doubt it would be easy to do as I guess the banks would not consider my parents to be able to pay any remaining mortgage. I wonder if I could give my share to my disabled brother and they can take his benefits as some proof of income.

Can someone let me know what my potential options?

ethank

You can't use Help to Buy : Equity Loan to purchase a newbuild unless you sell the old property.

What income do your parents have? What is the level of your brothers benefits? Would the joint income be able to take on the mortgage?

Most lenders will only accept benefits which are not subject to regular review (and potential removal) such as

• Incapacity benefit
• Disability living allowance (DLA) for a person aged 16 or over
• Disablement living allowance on behalf of a child under 16
• Attendance allowance
• Personal Independence Payment (PIP)

According to Nationwide - the benefits must be ongoing or have at least five years remaining.

TrickyDicky101

Do you want to take any equity from the existing property with you? Assuming you have a joint tenancy then you have £220k of equity in that property. Of course, you can't get at it without selling up and turfing your parents and brother out.

torro_2

Not entirely sure about how much disability living allowance my brother gets and as my parents income is probably not going to be able to cover the mortgage.

As my savings aren't great, I had thought about taking my equity but that's probably a no-go unless the banks are happy to accept my parents/brother on the mortgage.

I might see a broker but I guess I may be pretty much stuck given the circumstances. If I gave up my share and transferred equity to my brother, I could get my mortgage - but then lose my £200k+.

Thanks for the responses.

Mojisola

torro wrote: »

I live in a property with my parents - worth £500k. We have joint ownership and mortgage (me and father) and have £60K left on the mortgage. My disabled brother lives with us and he is claiming disability benefits as he cannot work. We live in London.

I have a wife and a child.

As there are five adults and a child living in the current house, won't it be too big for your parents and brother?

It would make sense to sell this house and then you would all have the capital to move on to new properties.

plazasuite

Hi - Might seem off the wall but I am going through an exercise with my dad to reduce his inheritance tax which might offer a solution to you. Your dad can gift his half to you and he and your brother can rent from you as landlord. Provided that the rent covers the mortgage interest then the mortgagor of your new house would have to take your dad's house into account as it takes care of itself . If the rent is set at a proper commercial level and your dad lives more than 7 years after the date of the gift then the gift of 50% of the property would qualify for 100% inheritance tax relief which would be a help as IHT is paid at 40% after the first £300K of an estate (unless your dad is married in which case the threshold will be higher). Of course the rent might be too much for you dad and your brother might also want a share of the house which would complicate things but you might be able to work something out on this basis so the advise of a good inheritance tax planner would be useful. The other thing that occurred is that given you have £250K equity in your dad's house could you put a mortgage on your dad's property to raise some additional funds to purchase the new property?

torro_2

Would I be eligible for a shared ownership house? The criteria says you cannot if you own a home - but do they cater for such circumstances such as mine? There are a couple of new builds in my area - and I could afford to buy one of those on a shared ownership.