House in Trust / Mortgage Query

McMooshie

Hey, hoping someone can give advice ....

My query is based around the house my mother and father purchase when I was young. My mother died in 1986 and the house is in trust to be shared between myself and my brother.

My father has remarried and still lives in the house.

Myself and my husband are now in a position to purchase our own property and I wondered where my “parents” house would come into this?

Would it be seen as a second property? Can I mortgage if I own part of another property? Would I lose First Time Buyer status?

I know I will need to speak to a solicitor but am just looking for basic advice on this and where I would possibly stand.

The house is probably worth around £250,000 giving me a £125,000 share.

McMooshie

Not sure if relevant, but we are in Scotland

AdrianC

If it's in trust, you don't own it. The trust owns it.

McMooshie

The exact details I would need to speak with a solicitor about as I am unsure if the property is still in trust or not as my brother and I received inheritance when we turned 21 and I believe the house was part of this.

As my father still lives in the house, I have always seen it as his however now I am in a position to be able to buy my own property, I wondered how this would affect a mortgage etc.

If we do “own” the house, where would we stand?

davidmcn

AdrianC wrote: »

If it's in trust, you don't own it. The trust owns it.

While that's true, it's likely (if it was simply being held until the beneficiary became of age) that for the purposes of the LBTT FTB relief it's going to be treated as being owned by the OP. In which case they're not a first time buyer, and unless the OP disposes of their interest before (or simultaneously with) a purchase then the purchase will attract the additional dwelling supplement.

MovingForwards

Can you get a copy of the will to see exactly how it's held in trust for you?

It may be the property does not become 'yours' until your father dies.

xylophone

Was the house left to you but with an "interest in possession" to your father so that he is the "life tenant" ("life renter")?

I ask because if this were the marital home, it would be somewhat unusual for a spouse not to make provision for the widow(er).

Was your mother the sole beneficial owner of the property?

What is shown on the entry for the property at the Land Registry?

What exactly does the will say?

TN1984

I think this will depend on what type of trust was created by the Will.

If it is a discretionary trust, you have no ownership of the property until it is transferred into your name.

If it was a trust that just held the property until you reached a certain age, chances are it would now be deemed to be in your name for FTB status, additional rate stamp duty etc.(I think this would be a strange way to do it in this instance personally but not unheard of)

Alternatively, it could be an Interest in Possession trust (nowadays it would be called an Immediate Post Death Interest (IPDI) trust but I don't think they were actually defined as such in 1986), where your father is allowed to enjoy the use of the trust assets during his lifetime, either by receiving income or in this case being allowed to live in the property, with you and your brother the 'remaindermen' on your father's death. In this case I believe you should retain FTB status etc as you would be the future capital beneficiary of the trust, as opposed to owning it right now. The trust may not even own a property by the time you receive the money if it is sold for whatever reason prior to your father's death.

I think you need to get the solicitor to look over the Will and land registry title, then go from there.

McMooshie

This is what I would need to speak to the solicitor about, the one who dealt with my mothers will as although my brother and I have always been told the house is “ours”, I really don’t know the ins and outs for sure.

Going by what has been said here, am I correct in thinking that it would not affect my mortgage application of the house is still in trust or as you say possibly still my father’s until he dies? I’m not sure I understand what davidmcn means.

If the house is indeed shared between my brother and I, does it affect how much of a mortgage you can get? Would I need less of a deposit if I “own” another property?

McMooshie

Thank you for this, this makes much more sense to me.

davidmcn

McMooshie wrote: »

am I correct in thinking that it would not affect my mortgage application of the house is still in trust or as you say possibly still my father’s until he dies?

It would only be relevant if it affects your affordability, if you're (partly) responsible for its maintenance etc.

Would I need less of a deposit if I “own” another property?

No, it wouldn't help in that way.