Rocks and Hard Places

Jellyworm

Hi all
I’m looking for a spot of advice as I’m finding myself in a bit of an odd situation. I’ll start with some background.
I’m 37, When I was 25 my parents got divorced and my mother was struggling to afford the mortgage. I decided to get a joint mortgage with her to help. That mortgage has 1 year left to run. The relationship with my mother is very strained and I want to move out and live with my girlfriend as soon as I can. My salary is about £23700, the only Major outgoing I have is me car pcp, I pay about £250. I do have a £6k credit card balance at 3.9%. My credit rating is pretty good (soaring high according to ClearScore app). I’m also hoping to reach my savings goal of £12k by the time the mortgage is finished.
Now, here’s why I’m feeling between a rock and a hard place. I’m technically a home owner as the deeds and mortgage (will be paid off next year) are in joint names. When the time comes to move out I can’t use any equity from the house an my mother will be continuing to live there. If I take my names off the deeds then I’m essentially giving up the house once my mother is no longer with us. She has this blinding desire to give the house to me and my sister 50/50 regardless that I’ve been paying for half of it for the past 12 years. Even if I did do this, I’ve owned a home in the past so I’m not sure I’d even qualify for first time buyer help.
So I find myself in the position of trying to get on the property ladder as a first time buyer without first time buyer help. I’m also 37 (38 once mortgage is paid) so renting while I save is just cutting into the time I could be paying a mortgage off and the max I’d be able to take one for would be 25 years currently. I must admit it also really frustrates me that the repayments on a mortgage would be considerably lower than rent. It literally feels like throwing money away while losing time.
So, there’s one rock and one hard place. Here’s another, the Girlfriend. I love her to bits but she’s never been good with money or dealing with difficult financial situations. In fact, she’s been down right naughty. She has 4 credit cards that have balances and have not been paid for about 3 years, these have been passed to debt recovery firms but she hasn’t responded to then either. I want to be able to share the costs/mortgage but her credit rating is the polar opposite of mine and obviously she has defaults.
Based on the online affordability calculators I’m getting “You could borrow” amounts of £45k-£50k, add my £12 to that and…….nope, not getting a house for that. If I do a joint calculation the figures are better (she’s only earning about £15500) but I imagine her credit history would just straight up disqualify us , either based on her defaults, existing debt with debt recovery or just her horrible credit score.
Not really sure what I’m wanting you guys to say but it just seems that whenever I look for a solution (shared ownership, help to buy, removing myself from existing deeds, joint mortgages or renting) I’m hitting a dead end. I fully appreciate I got myself into this situation but it was only because I was trying to do the right thing for the family.
Posted here as I thought this was the best area.

RelievedSheff

Could you and your mum remortgage your current house to raise some funds towards the deposit for the new one with your girlfriend?

mattvolatile

You own half that house. Could your mother remortgage to buy your half from you?

Jellyworm

RelievedSheff wrote: »

Could you and your mum remortgage your current house to raise some funds towards the deposit for the new one with your girlfriend?

My mother is 65, there's no option to remortgage and she wouldn't anyway.

mattvolatile wrote: »

You own half that house. Could your mother remortgage to buy your half from you?

She doesn't really understand any of the situation. Up until a year ago she still thought the house was hers and that I was only named on the mortgage. Even if it was an option for a 65 year old, A) she wouldn't and I'd need to find some way to convince her to remortgage and buy my half of the house when she believes that she owns it.


I'm aware there are probably legal routes to take but as strained as the relationship is, I have a conscience and i'm not prepared to entertain forcing my mother to move or sell. I just want to get out and get my own place.

Appreciate the replies though, any advice is helpful.

mattvolatile

What are the sums involved? How much is your mother's house worth?

You can likely raise an equity release loan on your half of the property, with your mother's permission. Alternatively, your mother can possibly get a lifetime or equity release mortgage to buy you out, but those two options will erode the value of her estate.

You should speak to a financial advisor and a solicitor, I think. This is a complex situation, but the basic fact is that you own a valuable asset and legally you have a lot of options. I appreciate the moral issues here -- don't kick your mother out of her home! -- but she needs to be made aware of the circumstances she's in so she can plan financially and legally for her own future, and the future of her estate (as that's obviously her concern). If she wants to leave the house 50/50 to her children, that would involve explicitly gifting her entire share to your sister -- as you've explained above, it's unlikely that that's what her will says currently. Is her will explicitly drafted to give her entire half to your sister? Given the delicacy of the situation, I wouldn't push her to (say) divide her half in two again. Just take the loss on that and advise her how best to ensure that her wishes happen. Even if she leaves her entire share to your sister, the terms of any equity release our lifetime mortgage will erode that portion anyway.

You need to sort this mess sooner rather than later, as the longer it goes on, the more acrimonious it is likely to become. You seem really level headed and fair minded. Sit down round a table with your mother and an IFA and work out a solution that allows her to stay in her home (and gift her ownership to whomever she likes) but which allows you to release your equity. There are products which will make this possible, I'm sure -- search "equity release joint mortgage" or "lifetime mortgage" for info and seek advice.

Ultimately, and sadly to say, this is your mother's problem in many respects. All the solutions you've suggested failed because you're approaching it as *your* problem. You're doing the right thing to ensure your mum stats in the house, but you're not doing the right thing if you're looking for solutions which leave her estate intact.

sammyjammy

Is the house owned as joint tenants? If so then the house will revert to your ownership when your mum passes despite her wishes.

Have you considered the 2nd home Stamp duty you will be required to pay as well?

Jellyworm

mattvolatile wrote: »

What are the sums involved? How much is your mother's house worth?

House is about £160k-170k
Thanks for the advice, I really do need to speak to an IFA

sammyjammy wrote: »

Is the house owned as joint tenants? If so then the house will revert to your ownership when your mum passes despite her wishes.

Have you considered the 2nd home Stamp duty you will be required to pay as well?

It's Tenants in Common.
I had heard about higher stamp duty but don't know the in's and out's. I keep seeing mentions of "a second home". As far as i'm concerned if/when I move out i'll just have the home i'm living in. I won't be splitting my time and I wont be renting out the other property, my mother will be living in it as an owner. I don't know if this muddy's the waters or makes no difference but it's definitely something I should be researching.

RelievedSheff

Jellyworm wrote: »

House is about £160k-170k
Thanks for the advice, I really do need to speak to an IFA



It's Tenants in Common.
I had heard about higher stamp duty but don't know the in's and out's. I keep seeing mentions of "a second home". As far as i'm concerned if/when I move out i'll just have the home i'm living in. I won't be splitting my time and I wont be renting out the other property, my mother will be living in it as an owner. I don't know if this muddy's the waters or makes no difference but it's definitely something I should be researching.

For the purposes of Stamp Duty it will be classed as a second home. It doesn't matter if you live there or not. You will have to pay the higher rate of Stamp Duty.

Jellyworm

Thanks everyone for the advice. I think i'll try and arrange to speak to an IPA

Let_Us_See

Best to drink the IPA and talk to an IFA!

Jellyworm

Let_Us_See wrote: »

Best to drink the IPA and talk to an IFA!

Now THAT'S advice I can get behind.
:beer: