Buying parents home

Scotty_P_123

Hi,

I'm looking for some information and advice on buying my parents home.

Plan is to extend the property and live there with my Partner and two children and mum (Dad passed away a few years ago) as the property is too big for mum on her own.

I was planning on using equity from my current house sale and a small mortgage which will be around 40% LTV of my parents home value although to do this we would be purchasing at a discounted rate.

Mum would prefer to transfer the property to me as there is no mortgage currently and then I could remortgage (if required) for the extension as this would allow equity to be retained.

Has anyone done this before or have any advice? Is this even possible?
Any input appreciated.

Thanks

00ec25

yours is a very regular question - have you discovered the forum search function ?

so your mother will continue to live in the property after making you its 100% owner. She will also be gifting a "discount" (of possibly 100%) to you.

Implications:
discount will be a gift with reservation of benefit for inheritance tax purposes

discount may be held to be deprivation of capital if/when mother tries to claim means tested care home fees

your range of possible lenders for your own mortgage will be much reduced because the ex owner continues to reside in the property thus retaining "rights" which many lenders walk away from

Scotty_P_123

Thanks for the reply and information 00ec25

I'll give the search function a go and see what comes up. The point about reduced lenders is useful .

Keep_pedalling

Unless your mother has substantial other assets, then she would be mad to throw away the one thing that provides her with security in her old age.

What happens to her if you go bankrupt, pre decease her are get involved in an expensive divorce?

Cakeguts

What happens if you lose your job and can't pay the mortgage.


These questions come up a lot on here and the person who is set to become homeless if anything goes wrong is your mum.

getmore4less

Is there enough cash from the sale of your place to do the building work?

You could buy the place at full market value with mum providing the loan or become joint owners(you buy part of the property) giving everyone more security.

The loan avoids issues with gifts and deprivation.

Would it be easier to sell both and find somewhere already suitable.

If there is a need to raise more cash then that has complications with borrowing.