Lending Mum money rather than equity release?

tyllwyd

Why are you considering lending her a lump sum? You should get legal advice, but if it was me I'd be more inclined to set up a monthly payment (or maybe six-monthly or a year). You could get a solicitor to draw up something that reflected how that payment should be reflected with respect to securing the money on the house. But that way, you'd be in control of the money until she needed it, so less chance of it being lost or spent too quickly. And if she needed care at home in the future, I'm not sure how a regular gift would be treated, but I assume that a lump sum in her bank account would be treated as her savings to be spent before she was entitled to any help from the council.

ska_lover

To me, it doesn't make sense to make this loan. Loaning money to someone who doesnt appear to have the funds to pay it back

IMO would be far better to buy a share of the house - if your siblings have an opinion, ask them if they want to do same

There is no sense in this loan imo

maman

It would be good to have some more information. Does your mother really need a large amount of money? or is her pension just a little bit short each month?


Does she spend her money wisely?


I know it's up to her what she spends her own money on but I'd be thinking twice about loaning money (or even encouraging her to go for EL) if she was just frittering it away on perhaps unnecessary shopping. I've heard of this happening through boredom or just going to the shops or using shopping channels for something to pass the time.


Is she in good health? Does she buy in help around the home?


There's a lot to consider before making a decision but from what I've read about ER, they don't seem like good value for money any more than taking out a mortgage would be a good idea if someone would just lend you the money interest free IYSWIM.


If it's not a huge amount of money she needs could you and your brother just make her a small allowance each month? Of course, depending on whether she has to pay for residential care eventually, you may not get the money back but does it matter?

Friday1989

If your mum owns her own home and is receiving the correct benefits, do you know why money is now tight? Have her spending habits changed? Have you both been through her bank statements? I don't want to be alarmist but is it possible she is being defrauded? There's been some really nasty fraud with criminals targeting vulnerable people pretending to be police officers, and saying they need them to make transactions to help their enquiry. We aren't talking about £1000 in this kind of fraud either

It's probably worth checking she's maximised her income. Some of the benefits your mum might be entitled to:
Attendance allowance
Pension credit
Council tax reduction or severe mental impairment exemption if she has a condition which falls under the SMI umbrella such as dementia

She might be able to cut expenses with:
Free TV license
Older person's bus pass, taxi card scheme
Winter fuel payment
Warm home discount
WaterSure scheme

moneymark

In answer to a number of questions...

Mum (touch wood) is in good health, extremely sensible with her money and not frivolous or extravagant by any means. She's still very independent and keeps a close eye on her finances.

In recent years she has developed depression and anxiety so worries far more about things which I guess is a sign of getting older. She is taking medication to help with this.

She hasn't at any point asked for money, I'd just like to be able to help relieve some of her worries and allow her to have a half decent quality of life.

Perhaps a small lump sum or monthly payment will be the best option for now. I will suggest she looks into whether there are any more benefits available to her.

Thanks again for your help and advice.

Pollycat

moneymark wrote: »

In answer to a number of questions...

Mum (touch wood) is in good health, extremely sensible with her money and not frivolous or extravagant by any means. She's still very independent and keeps a close eye on her finances.

In recent years she has developed depression and anxiety so worries far more about things which I guess is a sign of getting older. She is taking medication to help with this.

She hasn't at any point asked for money, I'd just like to be able to help relieve some of her worries and allow her to have a half decent quality of life.

Perhaps a small lump sum or monthly payment will be the best option for now. I will suggest she looks into whether there are any more benefits available to her.

Thanks again for your help and advice.

It really doesn't sound to me like your Mum needs a lump sum, however small.
And possibly not even a monthly payment.
Unless her outgoings are more than her income - and you've not said that that is the case.
What better quality of life would the money give her?
What would/could she do that she can't afford to do now?

Providing money when it's not needed isn't - imho - the right way to go.
Would having £x thousands in her bank account untouched help her mental state?
Would having £50 or £100 extra a month in her bank account that's she's not going to spend help her mental state?

Perhaps she needs more help regarding her anxiety & depression and reassurance that if she does have money issues, you're there for her.

Malthusian

ska_lover wrote: »

To me, it doesn't make sense to make this loan. Loaning money to someone who doesnt appear to have the funds to pay it back

She does, she has a house. As long as the OP is happy to wait until her death to get his money back, it makes perfect sense.

IMO would be far better to buy a share of the house - if your siblings have an opinion, ask them if they want to do same

That would be a very bad idea for her as if the OP went bankrupt and the house had to be sold, she would have to move out. Same applies if for any other reason the OP wanted to get his money back and forced a sale. A loan repayable on death doesn't have that risk.

In addition it is possibly Inheritance Tax inefficient as it may reduce the residential nil rate band available.

Mr_Singleton

I suspect the OP is trying to avoid care home fees so as to get their greedy mitts on the house and get the Tax payer to foot the bill for care.

74jax

Mr_Singleton wrote: »

I suspect the OP is trying to avoid care home fees so as to get their greedy mitts on the house and get the Tax payer to foot the bill for care.

How?

By giving her a lump sum, if she needed care that money would fund the care.

If she went ahead with equity release then whatever money she got from that, if not spent would go on funding her care.

I have no idea what you are basing your comment on.

Either way the mother gets more money, which if needed goes on care.

Pollycat

74jax wrote: »

How?

By giving her a lump sum, if she needed care that money would fund the care.

If she went ahead with equity release then whatever money she got from that, if not spent would go on funding her care.

I have no idea what you are basing your comment on.

Either way the mother gets more money, which if needed goes on care.

I too thought it was an unkind and unnecessary remark.
I didn't read that into the OP's first post.