Buying my mother's house - a few questions..

JP8788

Hi, thanks for reading.. I've been a active browser of these forums for a while now, but found myself needing a bit of advice.

I'm 28, and currently live with my mother. She's got to retirement age, and wants to sell the house and move into private rented accommodation and enjoy some of the equity she has in this house.

The situation is as follows... Her December 2016 settlement figure on her mortgage was just over £30k with Nationwide. She's verbally agreed to sell the house to me for £52,500, and we estimate the house to be worth approx £65,000. This gives her a nice chunk of cash to retire with, and gives me the house at a massive discount. My plan would be to keep this house for 2-3 years, renovate, and then sell on and take the equity into a new house.

I've read about "gifted" deposits.. Am I right in thinking that I wouldn't need to put a deposit down as such - just pay the mortgage product fee, as well as any survey/conveyancing charges? Provided of course the house is valued at around £65k as we expect? That should put me at an 80% LTV, giving me the chance to get a good fixed rate?

In terms of convenience, does this also mean that an estate agent isn't needed whatsoever, just a mortgage company and a solicitors? It all sounds straightforward to me, but I'm sure I'm missing something.

I also read about the fact that once the mortgage is completed, legally my mum needs to have moved out? The plan is that when she has her ~£20k of equity, she can private rent, but it might take a few months to get her sorted.. Does this cause a conflict legally?

Any advice appreciated,:beer:

Serendipitious

Is your mother aware of the massive insecurities involved in living in privately rented accommodation?

Does your mother have sufficient income (regardless of her capital) to fund the rent on an ongoing basis?

Her 'nice chunk of cash' will soon start to disappear after conveyancing costs, rental deposits and moving costs/redecoration are taken into account.

Deprivation of assets is also something she should consider.

I personally would never have partipicated in this with my mother. At 28 there are a good 40 wage-earning years ahead. Whereas on retirement you need every penny you can get to act as a buffer against the coming years.

JP8788

Thanks. I'll have a chat with her later. I mentioned private renting.. I actually meant renting from the council.. She's partially disabled (recent knee surgery and ongoing rehab) so qualifies for housing.

tanith

Surely once your Mum's surgery has healed and she is fit again she won't then qualify for council housing? Unless she has other disabilities of course.

chelseablue

Do councils really give council housing to people that own their home? Or who have sold and have a lot of cash in the bank?

Xyzzy

Some really valid points raised but to answer the question itself, this would be considered a concessionary or discounted purchase arrangement. You can take account of the equity in the property which your mother is gifting you subject to meeting certain criteria with the lender (which it sounds like you're likely to), You're right, to avoid her having a potential 'overriding interest' in the property (giving them problems if they were to repossess) the lender would need you to confirm that she'll be moving out on completion day

And no estate agents are required thankfully!