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Equity Release on Right to Buy House
Qwerki
Posts: 4 Newbie
Good Afternoon !
First Post On the Forum - so thanks in advance !
My 75 year old mum lives in a council house and has lived in the same house for over 50 years so should be entiled to the full Discount of £80K on her house. The house is worth about 110K. She should be able to buy the house for about 30K. She has recently been bereaved and is now living on her own. She gets the state pension and pension credit and some attendance allowance.
She has enough to live on but due to her situation needs a little care and social support. I'm her son and have been supporting her through a difficult year and have had to take part time work to help her out but my own needs are that I should be going back to work full-time to support my own family. I was hoping that it is possible to loan my mum the money to buy the house at 30K and then apply for some equity release on the house and top up her pension by about 4K a year for the next 10 years. This would give her some extra money to pay for some extra care she needs. When she dies the house can be sold and I would get the 30K loan back.
The big question I want to know is can we get equity release during the first 5 years ownership on a right to buy council house? The governemnt gives a discount and the rules are that if the house is sold off in the first year then you have to pay 4/5 off the 80K discount back, 3/5 in the second year and finally you get to keep all the discount after 5 years. So in effect the discount is worth about 16K for each year of ownwership in the first 5 years. Drawing equity of release of 4K per year should be feasable BUT do the rules allow you to do this?
First Post On the Forum - so thanks in advance !
My 75 year old mum lives in a council house and has lived in the same house for over 50 years so should be entiled to the full Discount of £80K on her house. The house is worth about 110K. She should be able to buy the house for about 30K. She has recently been bereaved and is now living on her own. She gets the state pension and pension credit and some attendance allowance.
She has enough to live on but due to her situation needs a little care and social support. I'm her son and have been supporting her through a difficult year and have had to take part time work to help her out but my own needs are that I should be going back to work full-time to support my own family. I was hoping that it is possible to loan my mum the money to buy the house at 30K and then apply for some equity release on the house and top up her pension by about 4K a year for the next 10 years. This would give her some extra money to pay for some extra care she needs. When she dies the house can be sold and I would get the 30K loan back.
The big question I want to know is can we get equity release during the first 5 years ownership on a right to buy council house? The governemnt gives a discount and the rules are that if the house is sold off in the first year then you have to pay 4/5 off the 80K discount back, 3/5 in the second year and finally you get to keep all the discount after 5 years. So in effect the discount is worth about 16K for each year of ownwership in the first 5 years. Drawing equity of release of 4K per year should be feasable BUT do the rules allow you to do this?
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Comments
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What about if your mum needs care in a nursing home.
Its something that needs considering. Speak to a solicitormake the most of it, we are only here for the weekend.
and we will never, ever return.0 -
Well at the moment - I guess the state would pay for her care as she doesn't have any capital.
If we buy the house ( in her name ) then I guess whatever discount is left after any equity release would be taken to contribute to the cost with the state paying the remainder. Obviously some things need looking at deeper just to cover every eventuality. The purpose of the equity was to cover her current care needs.
I just wanted to know if we can start getting equity release yearly from day one so to speak rather than wait 5 years0 -
How come she does not get her current care needs appropriately catered for given that she effectively has no assets?
At present she has a guaranteed place to live for life regardless of her financial circumstances.
75 is not old by today's standards - mum could have decades to live so risking her security should not be taken lightly - speak to a solicitor, or rather your mum should!0 -
I take it you've not heard of fuel poverty or the millions of elderly who sit home alone then.
4k extra income for the next 10 years would make a world of difference. That equates to a few hours a day home visits all paid for.
The need for solicitors and legal stuff is an abvious must as it could be possible for my mum to sell the house and abscond to the South of France leaving me out of pocket ;-)0 -
Wrong. You have to repay the entire 80k discount if you sell in the first year, 4/5 if you sell in the second year, 3/5 in the third year, 2/5 in the fourth year, and 1/5 in the fifth year.The governemnt gives a discount and the rules are that if the house is sold off in the first year then you have to pay 4/5 off the 80K discount back, 3/5 in the second year and finally you get to keep all the discount after 5 years.
Very unlikely.I just wanted to know if we can start getting equity release yearly from day one so to speak rather than wait 5 years
The house can't be sold in year one without having to repay the entire £80,000 discount, so mortgage companies will not count that as part of the equity for an equity release. So there's no equity to release. In the second year you could conceivable release £16k equity.
This is a stupid idea, to be honest. At 75 and already having care needs, she could well need to go into a care home resulting in the house being sold to pay the 24-36k annual care home fees.
Wrong. The equity release would be seen as deprivation of capital and any amount released would still be treated as her part of her assets.If we buy the house ( in her name ) then I guess whatever discount is left after any equity release would be taken to contribute to the cost with the state paying the remainder.poppy101 -
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She has enough to live on but due to her situation needs a little care and social support.....
If you need help with everyday tasks your local authority has a legal duty to carry out an assessment to find out what help you need.
https://www.moneyadviceservice.org.uk/en/articles/how-a-local-authority-care-needs-assessment-works0 -
When she dies the house can be sold and I would get the 30K loan back.
Sounds to me like when she dies you WILL get the £30,000 back....plus the £80,000 on top.
What you should do is gift her the money to buy the house and give her the £4,000 a year for the next 10 years to help with her day to day living. You will still get your money back when the time comes.0 -
foxy-stoat wrote: »Sounds to me like when she dies you WILL get the £30,000 back....plus the £80,000 on top.
What you should do is gift her the money to buy the house and give her the £4,000 a year for the next 10 years to help with her day to day living. You will still get your money back when the time comes.
Not if she goes into care !0 -
But no legal duty to provide that careIf you need help with everyday tasks your local authority has a legal duty to carry out an assessment to find out what help you need.
https://www.moneyadviceservice.org.uk/en/articles/how-a-local-authority-care-needs-assessment-workspoppy101
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