Buy a % of my mum's house

davidmcn

Gweeds wrote: »

As mentioned, the question was just around the practicalities of purchasing 50% of a property and if it was possible or not, rather than other consideration we'd need to take into account.

It's possible, but you won't get a mortgage on it - as above, the lender needs to be able to repossess and sell their interest, and who else would want to buy 50% of your mum's house?

Pixie5740

You could possibly buy the property if your mum is prepared to gift you 50% of the equity whilst you take out a mortgage for the other 50%. There are potential pitfalls to doing this so neither you nor your mum should attempt it without taking advice first.

If there is currently no mortgage on the property I am wondering if it would be possible to split the titles so there's one for the house and one for the annex. Your mum keeps the title for the annex whilst you buy the house.

Cakeguts

Ask mum to sell one of the rented houses and then use the equity from that to pay for the loft conversion.

Mojisola

Gweeds wrote: »

Whilst I hadn't thought of paying for care in my mum's later years, she has 4 other properties which are rented out, they would be sold before her home to pay for care costs.

Would your Mum be willing to sell one of her other properties and gift you the money to do the house conversion?

If she doesn't want to make it a gift, she could loan it to you and you could repay monthly - much easier than you trying to get a mortgage with the complicated situation you are in.

Mojisola

Gweeds wrote: »

we would like a stake in the property we live in.

Gweeds wrote: »

we're not worried about our investment

Putting your investment in writing as a loan so that you have rights over the house gives you a stake in the property.

leespot

If you've invested such a large amount in the house and annex, could your mum not sell one of the rental properties (assuming they are in equity / mortgage free) and give you that money back? That way you could put the extension on the house you're in?

Cakeguts

If you want to get a mortgage you would be much better to secure it against one of the rented house rather than the one you live in. This isn't quite so good for the tenants but if the worst happens you can sell the rented house without having mum move which you say has been the whole purpose of your efforts.

The problem with securing a loan on the house that you and your mum live in is that if the worst happens you will either have to sell that house and move or the bank will repossess it and that will defeat the object of keeping your mum in her home. If your mum didn't mind moving the obvious solution would be to sell the house that you all live in and buy another one that is big enough for all of you without taking out a mortgage.

You can get a mortgage but your mum can't so if she loses her home she can't get a mortgage to buy another. She has the rented houses she could move into one of those but that still means moving and as I understand it your ideas are so that she doesn't have to move. The safest way of trying to guarantee that she doesn't have to move is not to borrow money against her home.

steampowered

I'm not an expert but I don't think you could get a mortgage against 50% of a house.

However you could achieve a similar result in a slightly different way.

For example, perhaps your mum could sell you the house at 50% of its market value. You would then own 100% of the house and could get a mortgage in the usual way.

However, alongside that, you could sign an agreement under which you agree to pay your mum 50% of the proceeds when the house is ever sold.

This could either be just a contractual agreement or perhaps it could be secured by a second ranking charge on the property.

The above would have capital gains tax implications. But I am sure you could handle it by seeking advice from a competent accountant and a solicitor. It may also be worth speaking with a mortgage broker.

I suppose the alternative would be to set up a direct debit to pay the rent/mortgage you would otherwise have paid into a savings account, and save up for the loft conversion that way?

booksurr

steampowered wrote: »

For example, perhaps your mum could sell you the house at 50% of its market value. You would then own 100% of the house and could get a mortgage in the usual way.

However, alongside that, you could sign an agreement under which you agree to pay your mum 50% of the proceeds when the house is ever sold.

This could either be just a contractual agreement or perhaps it could be secured by a second ranking charge on the property.

The above would have capital gains tax implications. But I am sure you could handle it by seeking advice from a competent accountant and a solicitor. It may also be worth speaking with a mortgage broker.

I suppose the alternative would be to set up a direct debit to pay the rent/mortgage you would otherwise have paid into a savings account, and save up for the loft conversion that way?

if mother sells the house at a large discount and then continues to live there herself it will:

either, be a gift with reservation of benefit for Inheritance Tax purposes, it will have no CGT implications since the property was (and is) mother's main residence and therefore exempt from CGT

or, mother will need to place a formal loan agreement and charge on the property otherwise she would fall into the Pre Owned Assets tax rule where she continues to live in a property she once owned but has given her money to its current owners

Professional advice required I think particularly given the size of mother's estate with 4 rental properties and an 800k main home.

Keep_pedalling

As it stands all the money you have sunk into her house is IHT planning in reverse. Sounds like her estate will have a significant IHT bill to pay and you have in effect gifted her a chunk more money to be taxed on her death.

You all need to take some professional advice.