Second home mortgage with my pensioner parents - impossible?!

jasand

Hi all, 
I'm hoping to get your wisdom or at least some pointers in the right direction please. In summary, I currently live in London and my parents in Glasgow. Together, we'd like to buy a second home that they would live in for much of the year (let's say six months, for now). I don't think it's the most attractive proposition for most mortgage lenders, but from our rough calculations - it's affordable and actually makes sense as an investment long-term.

Here's the details:

Parents

Both 72 years old. 

Mum retired.

Dad working part-time. 

300k savings between them.

200k house with no mortgage

8k outgoings on utilities, car etc.

Dad 
10k pa state pension 

15k part-time salary (he'll probably fully retire in 2021)

Mum:
6k pa state pension

4k interest on investments

Me:
£75k salary
Current mortgage with balance of £200k, paying £900 per month.
Savings of £20k in a Stocks & Shares ISA - I currently pay £800 pcm into this.
5% of my salary goes straight to my pension but other than that, no additional commitments.
I'm an only child so will get all/most of the inheritance.

The plan:
Parents put £80k deposit down on a £270k flat in outer London. We get a £190k mortgage in all three names (me + parents) but I make the monthly payments, moving my current ISA payment of £800 to pay the mortgage (maybe with a small increase). I'd like them on the mortgage as I thought a) it might make it more affordable as a lender would include their pensions/savings etc., and b) I want them to feel like it's theirs - they'd be excited by that and it'd be a bit of an adventure in their retirement!

Parents would pick up costs of bills, service charge etc. 
They would then be near me for much of the year, living in the flat as they please but still having the family home in Glasgow.

They do not really want to do equity release on their Glasgow home - it seems quite expensive and the above makes more sense to us (admittedly from a slightly uneducated position). Interest-only mortgages don't seem worthwhile in this situation either, when I could be making a decent repayment each month.

So far, I've talked to the high street lenders who basically said "It's feasible, but only up to age 80". So that wouldn't work.
I've also had an initial discussion with one specialist lender (Family Building Society) who were very helpful and much more open to it, but I'd like to know more.

Questions
Has anyone done anything similar?
Are there 'later life' advisers that come recommended?
Is this a ridiculous idea?!

I know we'll probably need expert solicitor advice, but any thoughts would be gratefully received.
Thanks

JustJane101

Kensington Mortgages do a "later life mortgage". 2 year fixed with a 3.19% interest though!! If you went down this route, you'd have to increase your deposit to £82k, which would be a good idea anyway to bring your LTV down to the 70% threshold. The implications of this would be the mortgage would need to be done prior to the time they are 90, which puts your mortgage payments up to £1145, which probably fails affordibilty for you all.

Have you spoken to a broker about this? They're usually the best bet, and I wouldn't be so far through my mortgage application if it wasn't for them, I believed I was not able to get a mortgage but the brokers have been fabulous and worth their price 10x over if I get the mortgage.

[Deleted User]

There are high Street lenders with no upper age limit (maybe just 1 actually).  There are quite a few regional building societies that do it as well

I've just done something similar to this with taking mum to age 94 with the lender and the higher earner is the son so it could be afforded if she was to pass away

Interestingly I read recently about a case where a broker had an upheld complaint at FOS for doing something similar.  Just because the lender allowed it doesn't mean the broker should have done it.  
Not trying to put you off, but expect a lot of questions around plausibility etc when speaking to someone

Thrugelmir

Why don't your parents buy the property outright. Lend you the money. Then you repay them the money at £800 per month. 

jasand

JustJane101 said:

Kensington Mortgages do a "later life mortgage". 2 year fixed with a 3.19% interest though!! If you went down this route, you'd have to increase your deposit to £82k, which would be a good idea anyway to bring your LTV down to the 70% threshold. The implications of this would be the mortgage would need to be done prior to the time they are 90, which puts your mortgage payments up to £1145, which probably fails affordibilty for you all. 

Thank you, that's really helpful. 3.19% would probably make it unaffordable as you say but I'll look into it. Very good point about the small increase in deposit bringing the LTV down to the next level.

Deleted_User said:

There are high Street lenders with no upper age limit (maybe just 1 actually).  There are quite a few regional building societies that do it as well

I've just done something similar to this with taking mum to age 94 with the lender and the higher earner is the son so it could be afforded if she was to pass away

Interestingly I read recently about a case where a broker had an upheld complaint at FOS for doing something similar.  Just because the lender allowed it doesn't mean the broker should have done it.  
Not trying to put you off, but expect a lot of questions around plausibility etc when speaking to someone

Yes, that's good advice, thank you - we'll go through it again in great detail but so far, it looks affordable (based on our notebook calculations...) and everyone involved would be quite happy with the set-up. 
If you don't mind, could you tell me who the high street lender is that you're referring to? If it's Nationwide with their later life products, their issue is they wouldn't allow me (as a younger person) to be involved in. Thanks again.

Thrugelmir said:

Why don't your parents buy the property outright. Lend you the money. Then you repay them the money at £800 per month. 

Ha! Tbh, I don't think we have ever even considered this but you're right, it seems quite obvious... I'm not sure they would want to spend their hard-earned savings in one fell swoop but I'll discuss with them. Thanks.