Funding house price difference for parent; advice

kand449170

Hi,

I am trying to move my elderly mother closer to me, currently she is 160 miles away.

I have found a bungalow where I need to raise 40k to fund the purchase, using the equity on my mothers house sale to fund the balance.

I have 270k worth of equity in my home, it is mortgaged at 130k with 11 years to run.

I really dont know what the best way is to fund the difference, my sister is putting up the other 40k.

I was planning on using my mortgage reserve (woolwich) but thought it best to ask for some help here first, so please, any advice gratefully received.

Many thanks

AnotherJoe

Make sure that it is documented that you and your sister are providing a loan to your mother, indeed gets solicitor to add a charge against the bungalow in your names.

Otherwise the worst case is mother goes into care, local authority want the bungalow sold and all the money used to fund care including your £80k as it's been subsumed into the bungalow. . I would also document the loan so that it's indexed against house price inflation eg say house doubles, you get £80k back each.

amnblog

Your Mortgage Reserve may no longer be available to you. Have you checked?

There are many implications here.

Get some Professional advice.

getmore4less

kand449170 wrote: »

Hi,

I am trying to move my elderly mother closer to me, currently she is 160 miles away.

I have found a bungalow where I need to raise 40k to fund the purchase, using the equity on my mothers house sale to fund the balance.

I have 270k worth of equity in my home, it is mortgaged at 130k with 11 years to run.

I really dont know what the best way is to fund the difference, my sister is putting up the other 40k.

I was planning on using my mortgage reserve (woolwich) but thought it best to ask for some help here first, so please, any advice gratefully received.

Many thanks

reserve(secured overdraft)

if you have an offset then interest will be at your mortgage rate.

IF NOT

For all other Woolwich mortgages, the Reserve interest is charged at Bank of England Base Rate + 4.49%

Might be OK for a quick temp solution but there will be much better options.

kand449170

getmore4less wrote: »

reserve(secured overdraft)

if you have an offset then interest will be at your mortgage rate.

IF NOT
Might be OK for a quick temp solution but there will be much better options.

Thanks for this, I assumed it was at my variable rate which is 1.3% (10 yer fiixed ended with low follow on rate, Barclays were trying to get me off it)

Any options recommended as a starting point? should I do this as a 2nd mortgage?

getmore4less

See what Barclays will give you as additional borrowing keeping the tracker rate,

They may not let you keep the reserve as well.

(might be worth checking the rate for the reserve SVR is base + 3.49%)

an extra £40k will take you over 60% LTV so might help if you can raise some money elsewhere to keep below 60%

https://www.barclays.co.uk/mortgages/best-mortgage-rates/

The rate sheet has additional borrowing as
60% LTV 2y 1.69% and 5y 2.09%
75% LTV 2y 1.72% and 5y 2.29%

This page has slightly different rates.
https://www.barclays.co.uk/mortgages/existing-customer-centre/additional-borrowing/