Buying House from Parents - Concessionary Purchase of Transfer of Equity?

Under_the_Radar_2

Hi, not sure which option would be best for me.

My situation is, I live in a property with my fiancee and my 2 parents. The house is in my mum's name only. She has an interest only mortgage that needs repaying in the summer of 2018. She owes 187k on a property worth approx 650k. She doesn't want to move if she doesn't have to and equity release is the last realistic option I think.

I've spoken to one advisor who has recommended I buy the property as a concessionary purchase for 187k although I'm aware that leaves my mum in a situation where she won't be able to claim any benefits should she need them, and it might not be possible for her to officially reside at the property - although on that last note I believe some lenders will now allow this to happen, I think Natwest being one?

The other option that was suggested to me by a friend who has done similar is for my mum to sell me a share of the house with which I take out a mortgage on the house and pay off her existing mortgage. I've spoken to someone at Barclays who says this is doable, however I can't understand this process. Would the transfer of equity have to be done prior to the mortgage application? i.e. with my mum's current lender and then I would approach Barclays for the mortgage.

The second option (transfer of equity) seems best as it will safeguard my parents in any future scenario, but I'm a little confused how I would go through the process of doing it and if it is even as viable as Barclays have said. Has anyone any experience or knowledge?

My Mum and Dad are 69 and 73 respectively, Barclays have said they wouldn't take their age or finances into consideration when lending me the money.

Could this be a good option, or is my only realistic one a concessionary purchase?

Thanks.

AdrianC

£187k is ~30% of £650k. You take out a ~£187k mortgage, and become a tenant-in-common with a ~30% share of ownership. That borrowed money goes to repay the existing mortgage.

Your mother retains ownership of the other 70%, and she has not deprived herself of any of her assets. Should she need residential care, a charge can be placed against her share while your father is still in residence. That charge would later need to be satisfied, and the money that's been "borrowed" from the council to pay for her care repaid, when your father no longer lives in the property - which may mean you need to sell it. (I think the same would apply if it was your father needing residential care, assuming they're married, but somebody else may be able to confirm that.)

If your mother leaves her 70% to you, rather than your father, then her estate may be liable for IHT.

Can you get a £187k mortgage in your own right, with or without your partner?

Pixie5740

When you say you've spoken with one advisor do you mean an independent mortgage broker or a salesperson at a bank? There's a big difference.

I can't see your mum's mortgage lender transferring equity to you whilst your mum's mortgage is still outstanding. I'm also not convinced that you can get a mortgage for just part of a property.

Do you and your fianc!e want to live with your parents forever?

sparky130a

Just sell. It really is that simple.

tykesi

Duplicate thread:


https://forums.moneysavingexpert.com/discussion/5614724

Under_the_Radar_2

Pixie5470: I've spoken to a banks sales person at Barclays about the potential of buying a share of the property in order to settle my mums previous mortgage. She said that would be fine. I was recommended to her by a friend who used her for a similar purchase. However the financial situation of course may have been different.

I have a private advisor who had previously lined me up with a Concessionary Purchase deal, it was only when I found out a shared ownership might be possible that I started looking into it. As I say, it seems complicated, but if the end result is the mortgage being paid off by me, and us all to be able to live their, that is all we want.

Adrian C: Yes, thanks of replying, I had a mortgage agreed in principle for that figure as a concessionary purchase back in January, however it needed my last years tax bill to be submitted which I can't do until April, (the year before was substantially lower and I'm self employed so I need the higher average). So, assuming their policy hasn't changed it should be no problem once that has been submitted.

Under_the_Radar_2

Tykes:


Yeah sorry, I noticed the other section after and wasn't sure which category it feel under. I know some forums get very upset about it so if admin wishes to delete one or the other, they are more than welcome.

sparky130a

Honestly, why are you convoluting things?

Your parents sell and downsize and you and your wife start your own life.

Be glad you're in a position to do so.

glentoran99

sparky130a wrote: »

Honestly, why are you convoluting things?

Your parents sell and downsize and you and your wife start your own life.

Be glad you're in a position to do so.

Its in the opening post


"She doesn't want to move if she doesn't have to "

AdrianC

glentoran99 wrote: »

Its in the opening post

"She doesn't want to move if she doesn't have to "

Which is all very nice, but...

The interest-only mortgage she's been ignoring for 24 years is due for repayment in a little over a year. She can't afford to repay it, and she can't get another mortgage. Two retired people could live the rest of their lives comfortably on £460,000 in cash.

Under_the_Radar_2

13 years actually. It wasn't ignored. My dad's business went bankrupt due to a 6 week strike in his industry. He then had cancer, and when he got over that was too old too realistically seek new employment.

I don't know why you are convoluting what I considered a very straight forward question about the ins and outs of a transfer of equity or concessionary purchase. I didn't ask about whether I should sell up.

The property we live in is a decent size, with an annexe about the same size as a 1 bed apartment that would cost me over a grand a month to rent in the same area.

My fiancee fell ill about 3 years ago, and hasn't been able to work since, however she is not "ill enough" to be entitled to any income support. Therefore we live on a very tight budget supported by my income alone.

Buying my parents house for 187k and living in a nice 1 bedroom apartment, with the option to switch sides if we ever choose to have children, sounds a lot more lucrative than downsizing to a house where we will be in each others way and probably cost me at least an hour a day in extra commuting time.

If my parents sell, yes they will be able to buy something more affordable, but they don't want to, and if they did it would leave me renting for the rest of my life, or at least until they are dead, because I haven't had the income to both support my family and put away anything as a deposit for myself. Not to mention I have no other family, so the older and frailer they get, the more dependant they are on me, so chances are I will have to remain local.

I'm more than aware of the options of downsizing and of selling up and going our separate ways. It is not an option that I particular favour, so I am looking into either purchasing the property at the amount my parents owe on it, or buying a share of it to remortgage it with my mum still on the deeds of the property to safeguard it. That in my opinion is my best option. 460k cash, minus stamp duty and other legal fees for buying another property, won't really leave them that much better off, or myself.