What mortgage options do I have to buy a flat for my in-laws?

2cb

As per the title, can anyone offer me some tips?
We want to move my increasingly infirm in-laws to live near us, but the amount they'll get for their house won't buy anything in our area. They should get about £150k, and I'm looking to borrow about £90k to add to this. They won't get a mortgage, so it will have to be us that does it. Our total borrowing on our current house and the new one will be about 3.5x my salary.
Is it better to get a second mortgage on my home, or take out a separate mortagage on the new home?
They will be able to contribute a regular payment to the mortgage, but not the full amount. Does this make it possible / worthwhile to treat it as a buy to let?
Are there any other mortage options?
Thanks.

Let_Us_See

There are quite a few issues to consider, but if you fit affordability, release £90K equity with existing lender (sub-account and not second mortgage) in your own home and buy parents' home outright.

To safeguard your investment you can be Tenants in Common with parents on title deeds. All very simple and straightforward.

2cb

So adding to my existing mortgage is the best way, as long as it's possible?
I think we are going to be on the deeds, not the parents. Does this have tax implications as it will technically be a second home?

Wh05apk

There are several ways to do this, I suspect you may have a lower LTV by taking on the new property hence you will get a better rate.


Your parents will need to go on the mortgage as they will be living in the property, and contributing the deposit, this will limit your choice of lenders.


You cannot do as a BTL as you will be renting to relatives, who also would have contributed, and hence have a claim over the property.

2cb

Wh05apk wrote: »

There are several ways to do this, I suspect you may have a lower LTV by taking on the new property hence you will get a better rate.

I don't think LTV will be a problem. It will be less than 50% even if I borrow the extra £90k on my current house.

Wh05apk wrote: »

Your parents will need to go on the mortgage as they will be living in the property, and contributing the deposit, this will limit your choice of lenders.

That could be a pain. Can they not just give us the proceeds from the sale of their house and we use it to buy the new one?

Wh05apk

2cb wrote: »

I don't think LTV will be a problem. It will be less than 50% even if I borrow the extra £90k on my current house.

That could be a pain. Can they not just give us the proceeds from the sale of their house and we use it to buy the new one?

Why would it be a problem them being on the mortgage? it could potentially help from a tax point of view.


By taking a separate mortgage, it may make it easier to manage, as otherwise your deals (existing mortgage + new part) could have different end dates making it complicated to remortgage later, you would likely get better deals with lower fees for a new mortgage than a further advance.

Mojisola

2cb wrote: »

Can they not just give us the proceeds from the sale of their house and we use it to buy the new one?

Read up on "deprivation of capital".

2cb

Mojisola wrote: »

Read up on "deprivation of capital".

I did a quick Google. It all seems to be about housing benefit and care home fees. How is it relevant to me?

2cb

Wh05apk wrote: »

Why would it be a problem them being on the mortgage? it could potentially help from a tax point of view.

How? I'm interested!

Wh05apk wrote: »

By taking a separate mortgage, it may make it easier to manage, as otherwise your deals (existing mortgage + new part) could have different end dates making it complicated to remortgage later, you would likely get better deals with lower fees for a new mortgage than a further advance.

Currently on a good lifetime tracker with no fees, but I don't know if they'll let me increase it. I suppose I just get quotes for both and see what's the best deal I can get?

Mojisola

2cb wrote: »

I did a quick Google. It all seems to be about housing benefit and care home fees. How is it relevant to me?

It isn't - it's relevant to your in-laws.

With the best will in the world, you can't guarantee that you will be able to provide all the care that your in-laws need between now and their deaths.

If/when they do need care and it's found they have given away £150k, they will be assessed as if they still have it and will have to pay for carers/residential care. As they won't have the money, how will they pay?

2cb

Mojisola wrote: »

If/when they do need care and it's found they have given away £150k, they will be assessed as if they still have it and will have to pay for carers/residential care. As they don't have the money, how will they pay?

But if their £150k is tied up in a house that I half own, how will they pay then? Is that any better?