Shared Ownership.

Tavish_27

My wife and I are selling our mortgage free house in Scotland and moving to the Bristol area to be near our daughter and family but houses are more expensive in Bristol. Our daughter and son in law have looked into borrowing more money on their existing mortgage and gifting it to us as an interest free loan to afford buying a home in that area.
Their worry is, although the house will be left to them in our wills, if we needed to go into a care home and the local authority want to sell our house to recoup the cost, how would they safeguard their loan to use?
Trick one.

da_rule

Your question is contradictory, either they are gifting it or loaning it.

If they are loaning it, draw up a loan agreement and then register it as a charge against the property.

00ec25

not only your question but the title as well

do you really mean shared ownership?
that would make them formal co-owners and achieve nothing other than making you all liable for extra SDLT since they would be party to the purchase of an additional property and thus the whole purchase price would be liable to higher rate SDLT


your actual question seems to be how can your children ensure they get back whatever money they "invest" into the house that you will live in and which you will be the sole owners of

as da rule says that is covered by a formal loan agreement and a second charge. Having a second charge will restrict the number of lenders you can approach for a mortgage as some will not allow it, but others will.

Tavish_27

You are correct. They want to help us relocate and have the borrowing capacity through their mortgage lender, but have been told by that lender that the money must be gifted and not used to buy another property. They are concerned that their investment/gift may be lost if nursing care costs are incurred by use.
We could gift our kitty money to them and they could buy the Bristol house as a second home but I understand the rule say that relatives can't live in it without paying the full market rent.
Dilemma.