Helping elderly parents

Bagpuss2711

Hi, hope there is someone out there that can help me. My parents are about 80 and not in the best of health. They own a property which is worth about £200,000 and there is no mortgage or any debt. The problem is they have enough money coming in to live, but the house needs some essential renovation. I am happy to "lend" them the money, without them having to pay me it back. I assume I will get half of the property when the enevitable happens (sharing with my brother). I appreciate that should they need to go into care then the house has to be sold to pay for that, but is there anyway I can protect my investment without the council getting their hands on it. This money is part of my pension pot so I'm not in a position to just give it away. Thanks in advance.

missbiggles1

Have they looked at equity release mortgages?

Bagpuss2711

They don't want to do that as they are so expensive and hopefully want to leave the property to me and my brother rather than being ripped off by some equity release company.

teddysmum

There was a recent story ,in the press, where a couple have really fallen foul of equity release, because the accrued interest (at a high rate) left very little value in the property, for them, making it impossible to downsize to a more suitable home.

teddysmum

OP, a situation like yours has arisen, on here, before, so I suggest that you do a search to see what advice was given.

lessonlearned

You can lend your parents the money and put a charge on the property to cover the amount of the loan.

Your parents solicitor will be able to do this.

Bagpuss2711

I looked and looked before I posted this but couldn't find anything.

Bagpuss2711

Great, that was what I was hoping for. Do you happen to know if I did that, if they had to go into care and the house had to be sold the council wouldn't get priority over my charge on the property? So in other words I'd get nothing? I really want to protect whatever I spend. Thanks

lessonlearned

No the council cannot claim any part of a charge on a property.

For example any kind of mortgage is a charge, or any loan which uses the property as surety. The money you lend them for remedial works can be set up as a charge.

Any money the council needs to take towards nursimg home fees has to be what is left after all charges have been paid, less a small figure which is allowable, I think currently around £23k.

So for example, let's say house worth £100k less say £20k loan from you, less all EA fees, solicitors fees, selling expenses say £5k less £23k allowed.

This would come to around £48k, leaving £52k towards nurisng home fees.

Hope that helps.

Poppy9

I would ensure you involve your brother if you do place a charge on the house so he is aware and it doesn't cause any issue when you finally inherit.

lessonlearned

Poppy is right, your parents will probably have to put a codicil in the will anyway, so best to,discuss this as a family to avoid later confusion or upsets.