Helping mum

[Deleted User]

Hi all,

After a quick sense check of something me and my siblings have been discussing at the weekend.

In a nutshell our mum lives alone in a house that has just been valued at 300k she isn't in the best of health and doesn't work. She is on an interest only mortgage that is up in 2 years and she owes the bank 150k. Owing to changes in her circumstances/health this is why she has been paying interest only so will soon be in a position where she has to sell the property.

She isn't in the best of health and would sooner stay put but at present for her that isn't an option.

My siblings and I have had a chat with mum about what she's going to do and we came up with the idea of us buying the property for her. The plan would be that we take a mortgage for the 150k (less deposit), buy the house and then mum lives there rent free for the rest of her (hopefully long) life. After that point, the house would be sold and the proceeds split between us after any outstanding mortgage is repaid.

My question is whether it is permissible for a property owner to sell a property for a price well below it's present market value? On one side it would be cleaner for her to just sell it and buy somewhere else. She would sooner stay put if she can as the house has sentimental value, she knows the area and has been there her whole life. If she sells up then she would have to buy where she can afford which won't get her much round here. We looked at her living with one of us but that isn't possible either with young families.

Any help gratefully received. I'm sure it's not as cut & dry as we think it is. One thought I had would that it might have to be a BTL mortgage which might mean we have no chance if we want to put a tenant in who basically lives there rent free.My siblings and I aren't sure this is possible but thought we'd try and find out for mums sake.

Keep_pedalling

Anyone can sell a house at whatever price they like, but in this case as you already suspect you are unlikely to find a mortgage provider who would lend under these circumstances.

The big issue though would you mother’s loss of her current equity and the security it provides for her future. What would happen to her for instance of you or one of your siblings ran into financial difficulty through illness, unemployment or divorce all of which could force the sale of her house. One of you predeceasing her is a danger as well.

Should she need residential care, then the LA would likely treat this as deliberate deprivation of assets, so would still treat her as though she had those assets in assessment for self funding.

If there are no affordable places in her current location to downsize to then she might like to consider renting somewhere in the sheltered housing / assisted living sector.

Hutch100uk

As previous poster said, if your Mum had to go into residential care there is a good chance her house would still be used to pay for it. The local council will look at her assets and if they see you have purchased her house, they would potentially still be able to use it
My parents looked into transferring their house into mine and my sibling's names to prevent their house being used for care but we were advised by a solicitor that its not an option.

pinkshoes

Could she not sell then buy something for £150k?

Deprivation of assets would be your biggest issue. If your mum needed care then she cannot just give away £150k equity to you - this money would be needed to pay for her care,

babyblade41

I certainly don't understand the legal position, but just throwing this out there but why can't you all contribute to the current mortgage rather than buying it? .A solicitor could draw up some agreement to recover these payments on death

You say she isn't in great health and there maybe a case for deprivation of assets especially buying at a very reduced rate if she needs care at some point.

What I did for my Mum was build a self contained granny annexe with disabled features built in although she didn't need it at the time , the sale of your mothers house house could cover this cost and not hinder too much on family life .

I think a few of us replied at the same time stating "deprivation of asset" problem

getmore4less

babyblade41 wrote: »

I certainly don't understand the legal position, but just throwing this out there but why can't you all contribute to the current mortgage rather than buying it? .A solicitor could draw up some agreement to recover these payments on death ...

She is on an interest only mortgage that is up in 2 years and she owes the bank 150k.

I suspect the OP does mean the full term and not just a temp fixed rate.

Unlikely the lender will extend for ever but might be sympathetic to any plan that helps extend the time.

The key I think is how suitable is the house now and in the near future.

Reluctance to move often delays too long where moving is even harder or forced sale.

[Deleted User]

Thanks very much for the replies. Deprivation of assets was one of the other concerns I had and what happens if she needs to go into care because we wouldn't be in a position to pay for it. I'm of the mind personally that it's probably easier and for the best to sell the house and have 150k and then look at renting if buying for her isn't an option, but she is very attached to the house and the area.

My worry is she digs her heels in, does nothing and the house ends up getting forcibly taken from her by the bank. We wouldn't be able to pay it off before the mortgage is due up hence why we are looking at whether we can buy it for her. presumably we could, then if she needs to go into care later on, we could sell it to pay for it?

In short she wants the house more than she wants the money. She has existing income from pensions & other bits and bobs enough for her to cover her day to day life.

[Deleted User]

getmore4less wrote: »

I suspect the OP does mean the full term and not just a temp fixed rate.

Unlikely the lender will extend for ever but might be sympathetic to any plan that helps extend the time.

The key I think is how suitable is the house now and in the near future.

Reluctance to move often delays too long where moving is even harder or forced sale.

The house itself is in perfect order. It was basically totally refurbished about 10 years ago and should be good for her, in theory, for the rest of her life. It's big enough so that she could essentially live on the ground floor if mobility ever become a problem

AdrianC

She currently owns a £300k property, on which she owes £150k. She has £150k in assets.

The £150k borrowing needs paying back.

Seems to me to make perfect sense to jointly own the property with her, buying a 50% share in it by paying off the mortgage.


Her £150k remains in her name, and can be called on by the local authority if she requires care - no deprivation of assets.
You need to find £150k.

"Needing care" is not just about mobility. Who's willing to live there with her and become her 24/7 carer if she develops dementia, for instance?

MoneyGeoff

Has she looked into getting another interest only mortgage? RIO mortgages were legalised last year:

https://www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/retirement-interest-only-mortgages-explained-a9z9k0h9lbfy

Note that this is not the same as an equity release mortgage. It's just an interest only mortgage for old people.

davidmcn

c0nn0r84 wrote: »

My worry is she digs her heels in, does nothing and the house ends up getting forcibly taken from her by the bank.

While technically that's possible, in practice banks don't like risking the sort of publicity which comes from kicking little old ladies out onto the streets, especially if they're actually still able to service the debt.