Unusual remortgage question

danno1984

Hi all,

Apologies in advance if this question has already been asked - I've searched and couldn't find a similar question. Please post a link if there's already an answer!

Scenario: My mum is 67 and lives in a house in Cornwall. The house is valued at approx £200k. She has an interest only mortgage for approx £40k, with about 8 years remaining. She is the sole proprietor, lives alone, and the sole mortgage borrower. She receives a basic state pension and has a part time job (combined income of approx £10 - £12k a year).

I live in London. I do not own my own home (I rent). I earn approx £90k a year. I have surplus income of approx £1k per month which I put in savings after all outgoings (rent, personal loan, day to day expenses, etc.)

We would like to add me as a joint borrower on my mum's mortgage, and joint proprietor on the title deeds.

Q1 - Is this possible given I won't be living at the property, only my mum?

When this is done, we would like to remortgage the property (as joint borrowers), mainly to extend the mortgage term and change to a repayment mortgage, but also to release some of the equity.

Q2 - Is this possible?
Q3 - If so, could we remortgage for, say, £80k?
Q3 - Would my mum's age determine the maximum mortgage term? We'd like a term of around 15 years. In reality, my earnings would be more than enough to cover the mortgage payment - even at £80k - and in reality our intention would be that I pay the mortgage so my mum doesn't have to worry about it. However, I don't know if the term would be limited by my mum's age or whether, because her earnings are not actually relevant to affordability (i.e. my earnings would cover it), whether a lender would disregard her age? Is the fact that I would not be living at the property be a factor?

I intend to get financial and legal advice, but before I do I wanted to get an idea if this is even possible!

Many thanks

Dan

davidmcn

Any particular reason for adding you to her current mortgage, and then later remortgaging? Seems to unnecessarily complicate things. Normally you'd do both simultaneously.

danno1984

I wanted to separate the issue into two components. In reality, we'd do both together. But if the remortgage part isn't possible, I would still wish to add myself to her existing mortgage and the title deeds.

MovingForwards

Any reason you want to lose your fTB status to add to your mom's property when you live in London?

Could you not just set up a private mortgage to cover the outstanding mortgage?

Also if either of you get into debt and can't get out of it the house is potentially at risk.

danno1984

Thanks for your reply.

I'd rather lose by FTB status than my mum having to sell her home at the end of her mortgage term (when she's 75).

I'm not sure I understand your point about a private mortgage - do you mean a personal loan? Most banks won't lend so much on an unsecured basis as far as I'm aware (and in any event, the loan term and interest rate would be less favourable to a mortgage) and I can't see how I can get a mortgage on a property that I'm not an owner of? Could you clarify?

I understand the part about debt - this is very much a question about if it's possible. I'll obtain formal financial and legal advice before proceeding with anything.

silvercar

Loan your Mum £1k a month, secured by a charge on the property. Far easier than changing the ownership and preserves your FTB status for the future.

(The charge on the property is to ensure that you get your money back if the property needs to be sold for care fees.)

danno1984

Thanks for your advice. I'll keep this in mind when weighing my options, but I'm still keen for views on my questions in the original post.

TBagpuss

danno1984 wrote: »

Q1 - Is this possible given I won't be living at the property, only my mum?

Technically, you would be remorgaging rather than adding you to the morggage. But the fact you don't live there wouldn't prevent you from doing it.

When this is done, we would like to remortgage the property (as joint borrowers), mainly to extend the mortgage term and change to a repayment mortgage, but also to release some of the equity.

Q2 - Is this possible?

Possibly - your mum's age is likely to be the main stumbling block

Q3 - If so, could we remortgage for, say, £80k?

Possibly, assuming that the affordability checks add up based on your income.

Q3 - Would my mum's age determine the maximum mortgage term?

Normally, yes. Speak to a specialist broker to see if there are any exceptions. Some lenders will lend up to age 80


If your mum can afford her monthly payments, the other option may be for you to save up your surplus income then once you have saved £40K, lend her that money to claer her mortgage, and you can have a Legal Charge (private mortgage where you are th lender) over the house to secure the money you've lent her. That security prevents your money from being swallowd up in Care fees if that becomes necessary, and would ensurethat you get it back on your Mum's death 9as it would be paid back before her estate wwas distributed) you and she could agree, and include in the paperwork, on whether you would get £40K + Interest, or 20% of the hosue value, at the time you are paid back.

If she is struggling with the monthly payment then you could perhaps lend her moeny towards those costs each month until you can afford to lend her the full amount, and/or lend her a smaller luimp sum now to reduce the mortgage (again, you would both ned separate legal advice to draw up any oucmentation to secure this to protect you both)

danno1984

Thanks - that's very helpful.