Can we buy parents house outright then let them live in it?

TBagpuss

Why not get the house properly valued (not a zoopla estimate) then lend her the money to pay off her existing mortgage?

You pay £30K which goes to cleaer her mortgage, saving her £450 per month.

You have a legal charge over the property for 53% of its value (£40K being 53% of £75 - this assumes the value is right) payable upon her death or in the event that the property ceases to be her main home.

That way, she still owns the proeprty and has security, and you avoid any issues of deprivation of assets.

Your loan to her is secured by the charge over the property so (like any other mortgage) it takes priority over other debts , and if it is a % of the value you get the benefit of any increase in value between now andwhen it sells. Or you could privide for her to pay interest on it - what interest rate will you be paying on your further advance? You could link what she pays to what you pay (i.e. that she will pay interest at [bank]'s SV Mortgage Rate. If your rate is 3%, that would be around £1,200 a year or £100 month , on £40,000. She could pay you that each month so that you would not be out of pocket, and that gives her an extra £250 month to pay for her evey day outgoings, including saving for any specifc work she needs doing.

Alternatively you could buy a % of the house and then you would pay that % of the cost of any works, but that would open you up to potential CGT and stamp duty issues in future, so a loan may be a better way of doing it.

If you word the terms of the charge correctly then you can allow for the possibility of you mum moving to another property in the future, or indee paying you off via a commercial equity release arrangement if she wants to do so.

You can also ensure that the charge is worded so as to protect her against having to sell up if you and your spouse were to divorce or other unforseen developments, but specifying the circumsntaces in which it becomes repayable.

Your mum should speak to a solicitor who is a member of STEP and Solicitors for the Elderly for advice.

She should also check that she is currently claiming any pension credit or other benfiots to which she is entitled.

TheSilentMeow

gingercordial wrote: »

OP, what happens if you and your husband divorce? His mother's house will be a marital asset and may need to be sold as part of a split.

Or another scenario: your husband dies suddenly, you inherit the house. You remarry, you die (still within her lifetime) and your new husband inherits the house from you. Now a complete stranger owns your mother-in-law's house. Will he let her stay there?

It might sound far-fetched but these things do happen which is why your mother-in-law should not give up her security. No matter how much she trusts you sometimes circumstances mean trust is irrelevant.

I have inherited my fathers property which is worth significantly more. In the event of divorce I would be the one losing more than my husband. In regards to us all dying, that's a bit far fetched, she does have several health issues, and I really can't see that chain of events taking place before she dies.

Money_maker

Health issues aren't the only road to death in the same way that one can never forsee bankruptcy.

TheSilentMeow

Thank you to the people who have answered my question as to whether it is legal or otherwise, and those who have offered advice. The rest of you are pretty pathetic coming along on your high horses. This is a money and business forum, I wasn't looking for agony aunts, particularly ones who love to pretend that they don't do all they can to help their offspring, which is all my MIL wanted to do. She's not an idiot, she's actually a very bright woman, who wants to help us, and her grandchildren, while she is alive. In turn she will save money every month, remain in her home and continue to have in maintained by us to a good standard. We are not dishonest people. We love our parents and want them to be happy and not have worries, they want the same for us, if your situations do not reflect this then I totally understand how you might be sceptical of our agenda, but really save your judgements for the real world, not someone looking for some advice on MSE!

fed_up_and_stressed

TheSilentMeow wrote: »

She would be eligible for housing benefit provided we issued her with a tenancy agreement. We already have another property that we let. I am a member of a landlords association and am very educated in regards to regulations and tax.

Actually I doubt she would be eligible. More likely this would be seen as a contrived tenancy even with a tenancy agreement.

teddysmum

TheSilentMeow wrote: »

She would be eligible for housing benefit provided we issued her with a tenancy agreement. We already have another property that we let. I am a member of a landlords association and am very educated in regards to regulations and tax.

Would she get housing benefit, having netted £35000 from her house sale ?

jetplane

Are you sure you're very educated in benefit regulations? How is she going to claim housing benefit on a house she owned? How is she going to circumvent the notional capital rule? Is the rental rate of, whatever she can afford, a commercial tenancy or contrived? How will other benefits be affected? Do you know the answers to these basic questions?


Edit: crossed posts with above poster.

fed_up_and_stressed

teddysmum wrote: »

Would she get housing benefit, having netted £35000 from her house sale ?

No more than likely it would be treated as notional capital and as such would be treated as though this money was available for her to pay her rent.

missbiggles1

TheSilentMeow wrote: »

She would be eligible for housing benefit provided we issued her with a tenancy agreement. We already have another property that we let. I am a member of a landlords association and am very educated in regards to regulations and tax.

Not that much of an expert - you can't get HB for a property you've previously owned.:p

warby68

Surely OP has to realise how 'suspicious' the plan looks?

Extract MIL's capital by hiding it as paying bills and then get/keep housing benefit to contribute to overall family wealth building.