How do I sell 50% of a property?

JOD

HI all,

I’m new to this forum but hoping one of you may be able to offer some advice please.

I have a second property that I let out and it currently has an interest only mortgage (the tracker rate is so low there’s no point switching to repayment right now). The property value is £150K and the mortgage £120K.

Anyway my 70 year old mum currently rents but wants to buy for more security, but with only £95K to spend she can’t afford anything!

So she has asked if she could buy half the property off me then rent (well pay the mortgage) on the other half? I’m keen to do this as it would free up some of the equity for me but not sure how this would work in practice.

Heres is how we’d like it to work:

• She pays me £75K
• I keep the same mortgage deal (paying off £45K to bring it down to the value of half the house), so I have 50% on mortgage, she has paid 50% cash.
• How do we set this up legally so that she part owns the house?
• Also (not nice to mention) but should something happen to my mum, how will that be managed? I have two siblings and in my mum’s will we would be entitled to a third each, so in effect I would own 4/6ths of the property. In reality I would probably buy the other 2/6ths, so would want an option to buy it at market value. Even though I'm very close to my mum and siblings it would be nice to have something in a contract confirming this so no need to worry about it should the unthinkable happen.

I guess i just want to know if this is possible and how to go about it.

Thanks for all your help

JOD

ACG

You can not sell half a property. In essence you would have to become joint owners. However you can set it up so she owns 50% of the "shares" in the property. Any mortgage on the property is held jointly. You would need to do a transfer of equity and mum would need to be accepted on to the mortgage by the lender. Which if it is a BTL mortgage on the property would not be acceptable.

JOD

Thanks ACG. It isn't a BTL mortgage but I doubt she'd be accepted on the mortgage because of her poor credit history.

Is there any way to have her "gift" me the money and then have a separate agreement drawn up for me to agree to pay my siblings 1/6th of the property's value upon her death?

Sorry if this all sounds ridiculous!

Thanks again

ACG

I think you need to get legal advice.
If I was one of your siblings, I would be a bit concerned you are trying to swindle your mum out of £75k.

In essence, she is paying you £75k for half a house and paying rent on the other half. You are then getting 1/3rd of her share of the house when she passes.

I am not saying there is anything untoward, but on the face of it, it looks like a very one sided deal and I think you need to include your siblings in this and a solicitor before doing anything in order to avoid arguments down the line. Owning 50% of something does not give her security. If you go bankrupt the house could be taken from you both, she than has £75k but no home.

If you meet a 6ft leggy blonde gold digger, you may be convinced to sell up and force mum out.

Include family and get advice from a legal professional to ensure there is everything in place to protect you, your mum and your siblings are also happy with the deal on mums behalf.

JOD

I get what you're saying, but the reality is trying to find a solution for my mum who currently pays £725 p/m rent and can be kicked out at 6 month intervals. I know the option with me is not 100% secure (if my wife runs off with the milkman and takes me for everything!) but its more secure than any other options she has.

If i'm honest the deal is worse for me because my property is currently let for £600 p/m with a £180 p/m mortgage, so I would be losing that (i understand interest rates could fluctuate so this will not always be so favourable).

I think you're correct, i'll speak with my mum and siblings and discuss the options, along with getting some legal advice.

As for the leggy blonde....i'd have more issues than this...my wife would chop off the wedding vegetables with a blunt razor!!

Thanks again for your help.

[Deleted User]

Ignore AGC's negativity, they always suspect people are up to something.

Legal advice is a good idea.

ACG

DELETED USER wrote:

Ignore AGC's negativity, they always suspect people are up to something.

Legal advice is a good idea.

What are you on about?
I gave a view from the other side of the fence without making accusations and suggested everyone who could be affected is included in decision in addition to getting a paid professional on board to avoid any issues down the line.

I will apologise for trying to ensure a 70 year old woman is not being taken advantage of by her son (not that I am suggesting the OP is doing that). I would rather prevent it now than read about it in the mirror in 6 months time.

Tom99

I would start with a mortgage broker because I think that will be the hardest part to achieve given your mother's age.

getmore4less

The property value is £150K and the mortgage £120K.

Anyway my 70 year old mum currently rents but wants to buy for more security, but with only £95K to spend she can’t afford anything!

my mum who currently pays £725 p/m rent

Can you find £25k elsewhere maybe siblings between you to pay off the mortgage?

Mum buys 100% of the house giving her security.

You pay off the mortgage and lend her the money for the rest.
(maybe even a bit of a discount as a generous child).

She then pays you(and siblings if they contributed) back the rest from the £725 she was using for rent, or even nothing just leave the debts to be paid later.

When the inevitable happens any outstanding debts get paid and rest is distributed as per the will.

You build in contingency for siblings passing first and other life events.


One(maybe the biggest) risk is the care fees eat up the equity, the debts would get paid first once sold.