Buying a house for a family member

Cherry_Burton

Hi,

As can be seen in my signature I am mortgage free.

I have learnt that an elderly lady in our village will have to go into residential care shortly and she must sell her house to pay care costs. I have spoken to her family and they have agreed to give me first refusal. The house needs work because it has not been modernised. I am interested in buying it for a young member of my family. I would like to renovate it so the young person can live in it and pay the mortgage until they are able to get a mortgage in their name.

I have some savings but would like the deposit to be as small as possible to allow money for the renovations. I would be grateful for any advice on the best way to raise the funds. I am 57 years old, in full-time employment with no plans to retire.

Thank you.

MortgageMamma

hi Cherry

There are lots of ways this can be done. You could gift the young person a deposit and let them arrange a mortgage themselves, or you could go on the mortgage with them on a joint owner sole proprietor basis. This would impact the overall term of the mortgage though due to your age and a lot of lenders wanting the mortgage repaid completely before you reach your state retirement age.

There are ways around that obstacle and some lenders are more generous in this respect than others.

The best thing you could do is have a free initial appointment with an experience Mortgage Adviser to discuss your options. The devil is in the detail and its not possible to collect all the information needed on a public forum as you need to safeguard your private information.

BoGoF

Potential minefield and many would advise against this. Don't mix family and money they say. First of all, how much will you be buying for?

Other factors you need to consider;

Additional stamp duty as a 2nd property
You will become a landlord and have many obligations
If the relative is paying the mortgage amount to you this will be treated as rental income
If the property increases in value you will be liable to capital gains tax when you sell to relative

That's off the top of my head....there are more

Cherry_Burton

Hi

Thank you MM and BoGoF.

I am mindful that this is not an easy option and will probably be impossible. There are a very, very few houses on the market around here that a local person, even with a good income could possibly afford. No doubt the family will have to get a fair market price or the council will be after them. If it goes on the open market it will probably be purchased by a builder/developer who will renovate it and flip. Nothing wrong with that, of course, but it puts it outside the price range of people who were born and went to school locally. I know this is a familiar story all over the country.

Given the vanishingly small probability of getting an opportunity like this again, I feel I have to at least investigate the possibility.

CB