Buying From Parents

xylophone

You have explained to the broker that your father has a serious illness, that your disabled half brother lives with your parents in the property, that your mother is the sole beneficial owner and that she will be gifting you a substantial proportion of the property's value?

Assuming you find an institution willing to make a buy to let mortgage available in these circumstances, are you sure that your parents will be in a position to pay you sufficient rent to cover the mortgage or if not, that you yourself will be able to cover it and your own rent etc?

Remember that if your mother should ever require care, the local authority can look back as far as they please with regard to deprivation of assets - this might cause you some difficulty in the future.

Have you savings /insurance to cover you should you lose your job/ become ill etc?

Should you marry and subsequently divorce, the house would be considered in any financial settlement.

Gigervamp

I haven't seen any moral grandstanding.

What I have seen is people trying to help you by pointing out the potential pitfalls, and there are a lot in this case.

Just because people are doing this, doesn't mean there's any moral grandstanding going on.

AnotherJoe

Gigervamp wrote: »

I haven't seen any moral grandstanding.

What I have seen is people trying to help you by pointing out the potential pitfalls, and there are a lot in this case.

Just because people are doing this, doesn't mean there's any moral grandstanding going on.

100% this. don't take people telling you this is a poor idea as "moral grandstanding", just that it's a poor idea. You see the pitfalls come up everyday in posts here, as the saying goes "no good deed goes unpunished"

I think other options need to be explored. Can the second house be sold also and downsizing happen for example ?

AdrianC

WestWalesEd wrote: »

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.

BtL to a relative, with added SaRB? I'd be VERY surprised... Which lender(s)?

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.

No, not really. That would only play a part if your mother died intestate. Your father is simply not part of the issue, since he's not an owner.

However as it stands I'm not sure how that might affect any future care situation?

For your father, it wouldn't be an issue at all.
For your mother, it would certainly be deprivation of assets.

unless I want to risk my parents (mother's) home being repossessed, which won't be happening!

You'll probably think this is moral grandstanding, too, but you need to get your head around the fact that it's not you risking it. Your mother is in a situation entirely of her own making. She borrowed a very large amount of money 25+ years ago, with no plan to repay it, other than hoping the cheaper of the two properties she bought with somebody else's money would increase in value enough to cover the entire debt. It should have been obvious AT LEAST since 2008 that that was not going to happen, yet she's stuck her head in the sand and made no attempt to address the problem until now that it's become impossible to ignore any longer.

WestWalesEd

Thanks for all the replies - yes I felt like I was being lectured a little bit and I'm well aware that the problem is of my parents making, but for me, it's a no brainer, there is no other option.

In terms of repayments, the plan is as follows. On a BtL then we will have a formal contract etc, a shorthold tenancy agreement. I would have thought that it will be split something like 75/25 so I will subsidise. It all depends on what the actual repayment amounts will be. I am single, 34 (so on current projections could take a 34 year mortgage?), no kids, will have no debt and my only monthly outgoing will be rent on a salary of 27k. Mum's/Dad's Pension and benefits should cover the 75%.

In terms of if I lose my job - mortgage broker recommended an insurance policy for this, which again, I will do.

In terms of care costs in the future, I assumed that as everything has always been in my mother's name then it would only be for her that this could prove to be an issue. But good to be forewarned.

In terms of the second house being sold as well (the one I am buying) - it's not likely. The housing market where I live has been stagnant for years, this mythical boom is restricted to London and the south east, as it has always been. Unfortunately we don't have the time to pray for another buyer to come along.

Gigervamp

Be careful with the insurance policy. My daughter had one of those and she was supposed to be able to clam if she gave her job up to care for someone.

She gave up her job to look after me when I was diagnosed with cancer, but when she went to make a claim, saw in the small print that the person being cared for had to be claiming DLA/PIP, which I wasn't, so she wasn't able to make a claim on it.

She'd have been better off sticking her premiums each month into a savings account.