Mortgages coming to an end for over 65 landlord - What did others do?

Kayalana99

Hi Guys,

Got a few years left yet but looking at best options.

My Dad owns a fair few properties on interest only B2L deals that are coming to an end in a few years.

Because of recent (health) circumstances I am looking at taking over the property management to reduce stress but overall / bigger picture he is looking to essentially give me the reins so I pay a set amount to him and then I do essentially what I want with the property / property management.

I know it may be best to speak to a mortgage advisor / accountant but I wondered if anyone had been through this before (coming to end of mortgages for interest only)


One idea he keeps throwing around is to essentially transfer the property into my name, and then I would as above pay him a set amount, the interest only mortgages would then be able to continue for another 30 + years and I would pay him / his wife till both deaths occur and in which case I would then I suppose have to sort out what to do from their considering siblings.

I appreciate this opens a can of worms, and we would need to look into the legal aspect...but my actual question here is to just gather ideas of what *else* could be done and perhaps what others have done in this situation.

I have been researching lifetime mortgages but the information I gather seem to be around people owning their homes and wanting to release equity to their child or for holidays - and it sounds like the lender in this instance is looking to 'own' the property at the end and for people with affordability issues. There isn't really much information on a bigger scale of someone who is a landlord etc.

There is the other option of selling some of the properties of course to pay off the mortgages for some and keep remaining properties fully paid off - which once I get access to all the accounts / set up I will look at the finances for this.

Has anyone got any other possible ideas or ess had this situation before and what did you do?

My Dad trusts me 100% that he would happily do the above - but I think this will cause bitterness between the family and I think it would scare the wife (not my Mum) if he was to start transferring property over to me. Whilst I know that I would do the right thing by everyone and my Dad knows that as well, money has always caused family fall outs....:o

El_Torro

For what it's worth I am currently remortgaging my BTL property. I asked my broker to extend my interest only mortgage to when I'm 70. She said that wouldn't be a problem, though she hasn't come back to me with any offers yet. She said that some banks would even let me go further than age 70.

I think that looking at it logically an interest only BTL mortgage isn't particularly high risk for banks, especially if there's a lot of equity in the property. Selling is always an option since the person who owns the mortgage doesn't need the property to live in.

I know that banks don't always look at these things logically though.

dimbo61

You need to speak to an accountant, BTL mortgage brokers and solicitor.
If Dad owns a fair few BTL properties you need to find out the best way forward !
Limited company, partnership, Capital gains tax, Income, equity, condition of the properties and yield all come into account.

[Deleted User]

Very good prime lenders now have no upper age limit on BTL mortgages. Ive just done a few taking to beyond 100 years old.

Just get the mortgages sorted then make decisions separately

sal_III

With multiple properties "empire" have you explored the option of putting them into a SPV limited company with shares and directorship distributed between your dad, his wife and yourself to protect everyone's interest.

It will also make tax much easier to apportion, based on salary/dividends, rather then how gets rent payments, or earns from doing the management of the properties etc.

Mortgage_Adviser

Kayalana,


I have helped a couple of clients in the situation similar to yours and below are the things you should be aware of/ taking in to account:


1. If your father sells of his properties to you, there is likely to be a significant amount of stamp duty tax to pay.
2. Which of you two is likely to get a more competitive mortgage borrowing. Eg. you, as being younger and potentialy being in a good job or your father being an experienced landlord.
3. Are there any other sources of income that need to be taken in to account for tax consideration. Don't forget the more you earn combined across all sources the more you are likely to pay in tax. So if, for example income from portfolio is 100k pa and this is his only income only 50k of it will be taxed on higher rate. If for example you have a salary of 40k PA 90K of the portfolio income will be taxed at a higher rate.
4. If your dad was to pass the portfolio to you now and then survive for at least 7 years there is likely not to be any inheritance tax liability on this portfolio, there is also a good chance this portfolio will not be taken in to account as an asset if he need to go to care in the future.


The above are just a few things that need to be taken in to consideration. You do need a good adviser/broker as suggested to get it right.