Mum wants to sign home over to me

Shnook

Hello everyone been trying to find some information on our situation but struggling to find exactly what we need thought someone here might be able to give some advice?

My mum owns her own home which was signed over to her by my nan about 20 years ago as it was too big for my nan she wanted a bungalow. My nans intention was that my mum brother and I would live in it and one day it would be left to my brother and I in my mums will as our inheritance. Roll on a few years later my mum took out a loan against the house to clear some debts etc which wasn't the best move but she did it and at the time could afford the payments.
Roll on to now and my mum doesn't work as she is disabled through illness and her husband is her carer so they are on benefits and are struggling to make the loan payments and could risk losing the house and our inheritance.
She told me the other day that she would like to sign the house over to my brother and I and have a fresh start and move somewhere smaller. She wants myself and my husband and children to move into the house as we live in a 2 bed with a son and daughter sharing a room and can't currently sell as we are in negative equity. So her bigger 3 bed house would be much better for us.
There is roughly 10-15 yrs left on her loan which we discussed that we could carry in paying if we move into the house if the loan company will allow this? This will mean the loan keeps getting paid which we would look at as paying a mortgage if u like and the house won't be lost. Mum wouldn't have to worry about making the payments any longer and could downsize to somewhere smaller that would be better for her.

Has anyone ever experienced a situation like this before? Would be more straightforward if the loan wasn't involved will the loan company have a say over her signing over the house? My brother is on board with us living in the house but we would need to sort out his part of the inheritance as if we are paying the loan and then will need to do work on the house as it has no central heating and needs updating etc then he shouldn't still get a 50% share. It's all so complicated we don't really know where to start. I have told my mum to call the loan company and see what they say first then we can go from there.
It seems like a good solution if it is all possible as it means the house won't be lost and will stay in the family and we can move to a bigger house which is better for my family my mum can have a fresh start and not have to worry of the loan any more.

If anyone could give us some help or advice on this it would be great.

Thank you for reading

Cakeguts

The only way this is going to work is if you buy the house from your parents at the market price. If not and your parents have to go into a home you will have to sell the house to pay for their care home costs.

Councils are alert to people doing this. You need to look at the rules on deprivation of assets.

Tom99

If your mum is giving you her house has she got enough capital to buy another to downsize?

What is happening to the 2 bed you can't sell? Can't you mum move into that house?

Sea_Shell

Tom99 wrote: »

If your mum is giving you her house has she got enough capital to buy another to downsize?

What is happening to the 2 bed you can't sell? Can't you mum move into that house?

I though that plus How did your Nan afford her new Bungalow, if she'd "given" your Mum her house??

Lioness_Twinkletoes

It sounds like you can't afford to move into Mum's house, pay the loan, do the renovation work AND sort out your brother's share of the 'inheritance'. Added to the fact that the loan will be secured on the house, so the loan company will expect it paid in full before any change in title. So it's a non starter, isn't it?

You need to overpay your mortgage as much as possible in order to be able to sell and move. Your Mum needs to sell the house, clear her debt and have her fresh start. Hopefully she'll get enough to enable her to be independant from benefits for a while and enjoy a more comfortable lifestyle.

You and your brother need to accept that there is no 'inheritance'. Circumstances dictate that your Mum needs to sell the house in order to have a better life. I am sure this is what you all want and will work with her to achieve this.

Inheritance is the practice of passing on property, titles, debts, rights, and obligations upon the death of an individual. Not before.

John-K_3

Your mother, I am afraid, has left you stuffed. She has in effect taken and spent your inheritance.

If she has a loan against the house now she cannot sign it over to you without this being paid back first.

saajan_12

Shnook wrote: »

Hello everyone been trying to find some information on our situation but struggling to find exactly what we need thought someone here might be able to give some advice?

My mum owns her own home which was signed over to her by my nan about 20 years ago as it was too big for my nan she wanted a bungalow. - did she have surplus money over and above the equity in the home to buy a bungalow in cash?
My nans intention was that my mum brother and I would live in it and one day it would be left to my brother and I in my mums will as our inheritance. Did Nan specify what happens upon mum's death and effectively will it to you and brother, giving mum a right to live but not own the house? Or did she simple will it to mum and *hope* mum would pass it down? Roll on a few years later my mum took out a loan against the house to clear some debts etc which wasn't the best move but she did it and at the time could afford the payments. - I assume it was then legally in her name to be able to secure a loan against it? If Nan didn't will it to mum then the executors of Nan's will shouldn't have allowed this to happen.
Roll on to now and my mum doesn't work as she is disabled through illness and her husband is her carer so they are on benefits and are struggling to make the loan payments and could risk losing the house and our inheritance.
She told me the other day that she would like to sign the house over to my brother and I and have a fresh start and move somewhere smaller. - where will she get the money for a smaller house? She wants myself and my husband and children to move into the house as we live in a 2 bed with a son and daughter sharing a room and can't currently sell as we are in negative equity. So her bigger 3 bed house would be much better for us. - so you would still be paying the mortgage on the 2 bed
There is roughly 10-15 yrs left on her loan which we discussed that we could carry in paying if we move into the house if the loan company will allow this? -
1) Either you rent the 3 bed house from mum, paying rent to cover the loan. Mum would pay tax on the full income from you and she would be your LL;
2) Or you purchase the 3 bed house from mum. You take out another loan to pay off mum's loan, and make payments to your lender. If you purchase it for less than market price, there could be issues regarding deprivation of capital on the difference and inheritance tax
This will mean the loan keeps getting paid which we would look at as paying a mortgage if u like and the house won't be lost. - You'd be paying loan repayments/rent on the 3 bed and also mortgage on the 2 bed which you can't sell. Can you afford that? Mum wouldn't have to worry about making the payments any longer and could downsize to somewhere smaller that would be better for her.

Has anyone ever experienced a situation like this before? Would be more straightforward if the loan wasn't involved will the loan company have a say over her signing over the house? - Yes, (I expect) they have a charge on the house stating it can't be sold until the loan is paid off. So to sign over the house to you, you'd have to raise a new loan and use that to pay off mum's loan. My brother is on board with us living in the house but we would need to sort out his part of the inheritance as if we are paying the loan and then will need to do work on the house as it has no central heating and needs updating etc then he shouldn't still get a 50% share. - If Nan willed the house to you + brother (not mum) then brother is owed a 50% share in the value (less any costs to do up if you both agree on that) but the loan should be paid by mum. If however, Nan willed the house to mum, then you and brother don't have any claim to an inheritance until mum dies, and what you each get will be dependent on what is left in mum's estate. It's all so complicated we don't really know where to start. I have told my mum to call the loan company and see what they say first then we can go from there.
It seems like a good solution if it is all possible as it means the house won't be lost and will stay in the family and we can move to a bigger house which is better for my family my mum can have a fresh start and not have to worry of the loan any more.

If anyone could give us some help or advice on this it would be great.

Thank you for reading

The key is What exactly did Nan's will state? - once you answer that, all will become clearer

AnotherJoe

You need to post the amounts;
Whats mums house worth
Whats the size of her loan thats left
Whats your house worth
Whats the size of your mortgage
What would a new smaller flat or house for mum cost.

Would this work? Depends on the numbers.

Mum sells house, downsizes to smaller one, this releases enough money to give to you to get you out of negative equity.
You move.
Mum/dads will reflects the amount she gave you to get out of negative equity so that brother gets more.

Should at some point in the future the question of deprivation of assets come into play, eg council is concerned about say the £25k that mum gave you 20 years ago, you'll have to take out a larger mortgage to cover that. But that will only happen if mum goes into care and then dad dies since if as seems likely he'd be aged over 60 they wont (cant) force the house to be sold until he dies and it may be tough for them to trace this back anyway, as far as they can see she sold a house, bought one and the money she had left over got spent over 10 or 20 years.

This all falls down if after selling house and paying off loan there's not enough for them to buy even the smallest house/flat and get you out of NE. Sounds as if you also are struggling at the moment if you havent managed to save enough to pay off the NE then you likely cant afford the mortgage needed for a larger house.

AnotherJoe

saajan_12 wrote: »

The key is What exactly did Nan's will state? - once you answer that, all will become clearer

I dont think that is the key or even relevant. Mum didnt get the house via nans will, it was given to her before Nan died.

Therefore unless the house was actually put into a trust with a life interest for mum, which seems very unlikely to say the least given the rest of the financial background here, including the loan on it (how could that happen if mum didnt own it), all thats relevant is how much equity there is left in mums house and will that cover at least a smaller house for mum.

saajan_12

saajan_12 wrote: »

The key is What exactly did Nan's will state? - once you answer that, all will become clearer

AnotherJoe wrote: »

I dont think that is the key or even relevant. Mum didnt get the house via nans will, it was given to her before Nan died.

Therefore unless the house was actually put into a trust with a life interest for mum, which seems very unlikely to say the least given the rest of the financial background here, including the loan on it (how could that happen if mum didnt own it), all thats relevant is how much equity there is left in mums house and will that cover at least a smaller house for mum.

I agree, to an extent. I missed the 'signed over to mum' at the start, so yes the relevant point is the Nan's gift before her death rather than her will. However the question still remains whether Nan's gift was
1) to Mum; or
2) to OP & brother, held in trust by mum.

If its (1) then I agree, OP and brother aren't entitled to anything based on what Nan wanted, just what's left in Mum's estate / what Mum has and wants to gift them.

If (2) then Mum shouldn't have been able to take out a loan, OP and brother are entitled to 50% share before the loan is taken off.

AdrianC

Shnook wrote: »

Roll on to now and my mum doesn't work as she is disabled through illness and her husband is her carer so they are on benefits and are struggling to make the loan payments and could risk losing the house and our inheritance.

Nobody said "deprivation of assets" yet? Then let me be the first.

It doesn't sound as if there's any IHT gain from signing the property over first, so the only possible gain is to safeguard it from care costs, especially given her illness. It doesn't work like that, though...

She told me the other day that she would like to sign the house over to my brother and I and have a fresh start and move somewhere smaller. She wants myself and my husband and children to move into the house as we live in a 2 bed with a son and daughter sharing a room and can't currently sell as we are in negative equity.

You CAN sell. You just have to swallow that -ve equity. And if you move into this place, the exact same will apply.

There is roughly 10-15 yrs left on her loan which we discussed that we could carry in paying if we move into the house if the loan company will allow this?

They won't. They simply won't. You will need to repay that...

This will mean the loan keeps getting paid which we would look at as paying a mortgage if u like

...and you will need to get a mortgage to do so.

and the house won't be lost. Mum wouldn't have to worry about making the payments any longer and could downsize to somewhere smaller that would be better for her.

With what? She's gifting you tens of thousands of pounds. What does that leave her to sort her future accommodation out?

My brother is on board with us living in the house but we would need to sort out his part of the inheritance as if we are paying the loan and then will need to do work on the house as it has no central heating and needs updating etc then he shouldn't still get a 50% share.

The fairest way is to say "This is what the house is worth now, minus her mortgage, so here's half of the equity". But, of course, that's more money you'll need to find on top of clearing your current -ve equity, paying off your mother's mortgage, and improving the property.

as it means the house won't be lost and will stay in the family

Put the emotion aside. Can you AFFORD it? Does it leave your mother able to afford her new home?