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Parent's mortgage
mrs_T
Posts: 1,017 Forumite
My mum is 73 and for the last 17 years has had an interest only mortgage currently worth less than third of her property value. She has no problem paying the current mortgage from her pensions and she has been told the capital is due for repayment in 2026. I am her only heir, have my own property owned outright and always assumed her mortgage would be paid from the sale of her house if she moved/I inherited. Do we need to do anything now? Should I help her to repay the capital but leave the house in her name? TIA
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Comments
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Why should you do anything? She has a mortgage she can afford, so her finances are fine.
If she dies before 2026, her Executer(s) can sell the property and pay off the mortgage from the estate, and you will (I assume) inherit the residue.
If she lives to 2016, she will, of course, then have to find the money to pay off the mortgage, but given that you seem able and willig to help, you could do so at that time.
A further factor is the possibility of Care Home fees which may arise in the future. The local authority will assess her ability to pay based on her assets. If you pay off her mortgage now, her asets will increase, and the property will be sold to pay her CH fees. If you don't, there will be less assets, and the LA will chip in towards CH fees earlier.0 -
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If you have the cash, you could lend your mother the money to repay the mortgagee and yourself take a charge on the property?
Your mother could then repay you the capital and interest/interest only etc.
If she should go into care and need to sell the house, you would be repaid from the proceeds.
If she stayed in the house until death, the balance of the loan could be set against any IHT liability?0 -
If you have the cash, you could lend your mother the money to repay the mortgagee and yourself take a charge on the property?
Your mother could then repay you the capital and interest/interest only etc.
If she should go into care and need to sell the house, you would be repaid from the proceeds.
If she stayed in the house until death, the balance of the loan could be set against any IHT liability?
This is the kind of thing I had in mind, thanks. I think we need legal advice.0 -
I think we need legal advice.
Indeed - a formal agreement and charge registered on the deeds at the Land Registry?0 -
No-one forces you to sell your home.
If you move into a care home and are self-funding, you can choose the home you live in and will get a bill from them every month. If you have to sell the house you no longer live in to pay the bill, that's what you have to do. If you can pay the bill through other means, you don't have to sell the house.
If you don't have any assets, you will go into a home that will accept the council's level of funding.0 -
Think you need to do a little study into deprivation of assets before you give such advice again, the rich never go into LA funded care homes, and the OPs mother may also like a choice in care home if that was ever required rather be left with just what is available from LA funding.0
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I take it you have not yet covered law in your finance course. Next year perhaps?
This sounds like fraud.0 -
But if you claim LA funding so as not to have to pay the bill yourself, the LA will assess your assets, including property, and yes, they will force you to sell the property if appropriate and claim back funding they hav paid out.No-one forces you to sell your home.
If you move into a care home and are self-funding, you can choose the home you live in and will get a bill from them every month.....
If you don't have any assets, you will go into a home that will accept the council's level of funding.0 -
Unless OP actually lends her mother 90% of the house value that would be fraud.
However, the proposal to lend the *actual* amount needed to pay off the mortgage (and any extra if Mum needs money for repairs etc) and to secure that borrowing with a legal charge against the house is a sound one, provided that you both get proper legal advice and that there is a formal legal charge over the property to secure the loan.
A solicitor who is a member of STEP will be able to advise your Mum about the tax and other implications.All posts are my personal opinion, not formal advice Always get proper, professional advice (particularly about anything legal!)0
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