Buying From Parents

AdrianC

The problem you face isn't just that you'll be needing a BtL mortgage, since you'll be becoming a landlord - but that you'll be becoming a landlord to tenants to whom you are related (lenders really don't like that, because you'll be very unwilling to evict them). As if that wasn't itself enough, your related tenants are also the vendors - so it comes under Sale-and-Rent-Back restrictions.

At the end of the day, your parents have had PLENTY of forewarning of this situation, and are now relying on you to dig them out of the hole of their own making.

Seanymph

I just want to add a'no' - the guys on here have given you very good advice, but for what it's worth:

You will have 100% of the liability of the mortgage, and none of the benefits of the home. How do you intend to service the loan? And if they don't pay you the rent? If your parents don't cover it? If their income drops? Their benefit is reassessed?

You will never be a first time buyer again, with those benefits - you would be squandering the leverage that gains you on this purchase.

In the future you may want to buy a house to live in - you will not get released from this property, and will not be able to sell it for what? Twenty years? Thirty? Rental all the way for you!

teddysmum

With two family members having disabilities, the deprivation of assets is worrying, as they will be exempted from having state help for care and your mum may reach a point where she can't cope with the needs of two people.

tlc678910

Hi,
I can see that you are trying to do something to help your family and your heart is in the right place but I am curious when you say eventually you will have a house worth 200K for 90K ish.

Have you considered what this means for your brother? If you buy the house will you be gifted over 100K of equity (effectively your inheritance I guess) and he nothing? These kinds of details need working out before you proceed or you might find that you and your parents/brother have different ideas about the future of the plan and there would be a risk of a rift in the future.

Good luck - I hope you can find a solution that works for all of you.
Tlc

WestWalesEd

Thanks for the reply, but please, no moral grandstanding - I'm merely here for advice not an opinion on the rights and wrongs of the situation! That goes for all posts!

WestWalesEd

Thanks tlc

Yes, of course these issues have been discussed. Obviously the property would be my inheritance and I would use some of that money for any care needs for my brother, though in all honesty he will probably come and live with me when the time comes.

Ed

WestWalesEd

UPDATE:

Went to see a mortgage broker yesterday who advised much of what has been said above. However, there are lenders who will take on a Buy to Let mortgage of this nature, so we are looking to proceed with this option.

I probably have clouded the water somewhat by omitting that my parents are unmarried and all assets have always been in my mother's name. My mother is also not my disabled brother's mother! Sorry these may have been crucial details. However as it stands I'm not sure how that might affect any future care situation?

As mentioned above, please don't give me any moral grandstanding. Obviously it's not ideal for me but that decision is made - I really have no other option unless I want to risk my parents (mother's) home being repossessed, which won't be happening!

Pixie5740

If your parents aren't married and the property is in your mother's name only then your father has no asset to dispose of so he can't deliberately deprive himself of the asset in the case of paying for care home fees should his condition deteriorate to the point he requires residential care in the future.

If your mother ever requires residential care at some point in the future then by giving away the equity in the property she would have deliberately deprived herself of an asset.

How will your parents pay the rent? Do they have enough income and/or saving or will they require LHA? If they do require LHA it would be worth investigating whether or not the council will consider them eligible for LHA for a) a property which used to be their home, b) renting from a close relative (contrived tenancy).

Keep_pedalling

Who owned the property that has just been sold?

Linton

I feel you may need professional advice. Have all the what if's been considered? eg you die and the house must be sold to repay the mortgage. You lose your job.