Buying a house for Mum

polgara

Situation is Mum owns her house outright and has just listed her house for sale but she has already found a perfect flat for her - meets every single want on her list. Its a repossession and it very keenly priced.

The issue is Mum's house is likely to take a while to sell and the bank that has repossessed the flat wont take any offers unless the finance is already in placed. Her house is worth about twice the value of the flat even though she has put it on a the lower end of the likely price (it does need some work).

Her bank has already said they won't provide either a bridging loan, mortgage etc as she is 72. I've suggested that I could be a guarantor on any loan/mortgage but they don't seem interested in that either. The agent for the flat has looked into me getting a mortgage (FTB) and letting Mum live there (so not a BTL). The mortgage company seem ok with that as long as there isn't a formal tenancy agreement etc. I leave with my partner in his house so I have no existing mortgage etc as I contribute to the mortgage/bills direct to him.

The rate is 3.6% fixed term for two years with the Natwest. Just trying to think things through - Mum to pay me the amount of the mortgage but I assume I would have to declare this on my income tax? Should I add extra to compensate for this plus the amount of the deposit to be included?

I would say that she could pay me the full amount but would I fall foul of IHT if anything happened to her in the next 7 years (she's getting on a bit and has COPD but that side of the family generally live to a ripe old age!).

I know I need to be prepared for CCT but is there anything else? My Mum wants to make sure that my brother doesn't lose out on inheritance but I'm more worried that I'll end up significantly out of pocket.

Pixie5740

If your mum pays you money in exchange for living there then a tenancy will exist.

G_M

Why not buy the flat yourself on a variable rate residential mortgage since you have no property and /or mortgage yourself.

Then in a fewmonths when mum sells her house, she can buy it off you for cash.

No Inheritance tax issue (she's paying you for it).
No Capital Gains Tax (you sell it to her for what you paid).

Sorted.

edit: yes, as Pixie says, if you receive payment of any sort it's a tenancy (even if the cash goes direct to your mortgage lender), but frankly, assuming mum will sell her house within months, who's going to know or care.....

shhh.

Biggest issue is going to be thatit's a repo - difficult and stressful to buy.

Hoploz

She has asked her bank about financing, but she might find she can get something elsewhere, by seeing an independent broker.

polgara

G_M wrote: »

Biggest issue is going to be thatit's a repo - difficult and stressful to buy.

Ooo - why do you say that?

Red-Squirrel_2

I'd say the best solution is to wait, and to stop looking at flats until her house is under offer.

Its really tempting to look, but as you've now discovered its far too easy to fall into the trap of spotting the 'perfect' place before you're ready, when the fact is that there will be plenty of other places available in a few months that are just as good but without all these complications!