Buying a house with/for parents

commonsensebrother

I will be getting some professional advice on this but would welcome some initial advice/thoughts.

I’d like to help my parents relocate closer to where we live. They’re retired and over 65. 

They own a house outright worth approx 150k.

We own a house worth approx 550k with 300k mortgage outstanding. Currently overpaying by £1500 a month or more. And have approx £50k cash easily accessible.
Their new house would cost approx £250k.

What are the best options? The following seem like they might be possible.
1. We (wife and I) buy with a buy to let mortgage and they use their equity to pay us rent.
2. We remortgage and release some of our equity and combine with their equity and buy outright jointly. 

3. They put in their equity, we put in a bit and we get a joint mortgage for the rest which we (wife and I) will pay. I understand this may not be possible due to their age, although this would be my preferred option.

Appreciate this is complex and will
need strong legal advice but would welcome any thoughts on whether there are other options or which might be best for all involved.

Slithery

Go for #2.
Just make sure you set it up as  personal mortgage with a charge against their new property.

xylophone

You could remortgage and use the money as a  loan to your parents secured against a first charge on their home.
This enables them to buy outright (and avoids  any question of extra SDLT if  had joined in the purchase).
You could choose to charge them interest ( must be declared to HMRC), or to let it roll up (taxable when finally paid).

commonsensebrother

xylophone said:

You could remortgage and use the money as a  loan to your parents secured against a first charge on their home.
This enables them to buy outright (and avoids  any question of extra SDLT if  had joined in the purchase).
You could choose to charge them interest ( must be declared to HMRC), or to let it roll up (taxable when finally paid).

That’s an interesting idea. Thank you for replying

luvchocolate

Lender's don't like you renting to members of your family. You would need a regulated buy to let mortgage..harder to get.

greatcrested

Lend them the money.

* they then have the security of ownership, not renting or joint ownership

* avoids the additional 2nd property SDLT

* you protect your loan via a charge on the property so you get it back if they sell or on death,

blue_max_3

An issue which comes to mind is if they have to go in a care home at some point. Given the current situation where they can come after their home to pay for it, I would want to consider that in the planning.

AdrianC

4. They sell their £150k property, you lend them £100k (£50k cash + £50k released equity from your home) with a charge against the purchased property.

Slithery

blue_max_3 said:

An issue which comes to mind is if they have to go in a care home at some point. Given the current situation where they can come after their home to pay for it, I would want to consider that in the planning.

Which is exactly why we've all suggesting lending the money with a charge against the property...

blue_max_3

Slithery said:

blue_max_3 said:

An issue which comes to mind is if they have to go in a care home at some point. Given the current situation where they can come after their home to pay for it, I would want to consider that in the planning.

Which is exactly why we've all suggesting lending the money with a charge against the property...

Thank you. That wasn't clear from the replies. Is this known to be successful to ring fence the property?

oldbikebloke

blue_max_3 said:

Slithery said:

blue_max_3 said:

An issue which comes to mind is if they have to go in a care home at some point. Given the current situation where they can come after their home to pay for it, I would want to consider that in the planning.

Which is exactly why we've all suggesting lending the money with a charge against the property...

Thank you. That wasn't clear from the replies. Is this known to be successful to ring fence the property?

there is a subtle difference
- it does not ring fence the property,
- it ring fences the money you have invested in it 

the council can still require the property to be sold to pay for care home costs, but the loan to you has to be repaid first from any sale proceeds before the rest can be used to fund care