Near-retirement parent mortgage advice

lauramoneysaver

Hi,
My dad has £40,000 in savings but is currently renting a 1 bed flat. He will be retiring in the next few years, but it's very expensive to rent where he is and he is having to dip into his savings to make ends meet. I'm an only child and worried about his savings depleting and not having a safety net to look after him in old age, and I also want him to be able to live somewhere he can call home. I am living in London and saving for my own deposit (a bit far off still!) but I am starting to think he/we (I am more likely to be given a mortgage) should buy a flat that he can live in with a good chunk of his money as a good deposit so at least it is invested that we can take money out of if and when he needs to move into somewhere with more care when he is a lot older. I guess my question is, will it be possible for me as a first time buyer to buy a house with him and him live in it, does this need to be a rent to buy mortgage or is it different if its family? Can it just be a normal mortgage? And when I am ready to put a deposit on my own flat, would it affect my first time buyer status if I bought for him/cosigned with him? Would it make it harder for me to get a mortgage if i am already down on a flat that my dad is living in?

Hope that makes sense! I am very new to the world of mortgages and I don't think this is the most common of situations!

Thanks!
L

greatcrested

I imagine you and dad could apply jointly for a standard mortgage and buy together. Strictly speaking you'd both be expected to make the property your main residence, but if dad lived there and you 'moved out' (ahem!) I doubt there's be a problem. Of course, eligibility might be impacted by his age - how old is he?

If you and dad jointly buy together, then you will no longer be a FTB for SDLT purposes.

And mortgage lenders will certainly take into account the fact that you already have a mortgage when assessing you for a 2nd one in your sole name.

[Deleted User]

lauramoneysaver said:

Hi,
My dad has £40,000 in savings but is currently renting a 1 bed flat. He will be retiring in the next few years, but it's very expensive to rent where he is and he is having to dip into his savings to make ends meet. I'm an only child and worried about his savings depleting and not having a safety net to look after him in old age, and I also want him to be able to live somewhere he can call home. I am living in London and saving for my own deposit (a bit far off still!) but I am starting to think he/we (I am more likely to be given a mortgage) should buy a flat that he can live in with a good chunk of his money as a good deposit so at least it is invested that we can take money out of if and when he needs to move into somewhere with more care when he is a lot older. I guess my question is, will it be possible for me as a first time buyer to buy a house with him and him live in it, does this need to be a rent to buy mortgage or is it different if its family? Can it just be a normal mortgage? And when I am ready to put a deposit on my own flat, would it affect my first time buyer status if I bought for him/cosigned with him? Would it make it harder for me to get a mortgage if i am already down on a flat that my dad is living in?

Hope that makes sense! I am very new to the world of mortgages and I don't think this is the most common of situations!

Thanks!
L

What's a rent to buy mortgage?

If your dad is only a few years away from retirement his mortgage options are going to be very limited.  Any mortgage he is eligible for, even with you, is going to have a very short term.  If you were to use his savings as the deposit and get a mortgage on your own that would pose a large problem for many lenders since the deposit would be coming from someone living in the property but not party to the mortgage.  What kind of mortgage would you get?  Not a residential mortgage because you wouldn't be residing in the property?  A Buy to Let mortgage?  If so it would need to be regulated to let to family and would you be charging your father rent?  If so you would need to declare that to HMRC.

If you buy the property jointly or by yourself you will have to pay SDLT.  The relief for FTB is only from properties the FTB intends to live in as their only or main home.  When you then come to buy your own home the purchase will be subject to the higher rate of SDLT.  You wouldn't get and HTB ISA/LISA bonus when you come to buy and the mortgage on your father's home could impact your affordability.

More practical solutions would be for your father to move to a less expensive area, to check what benefits he maybe entitled to now and/or when he retires, to look into sheltered housing for the over 55s from the council or local housing associations. 

lauramoneysaver

greatcrested said:

I imagine you and dad could apply jointly for a standard mortgage and buy together. Strictly speaking you'd both be expected to make the property your main residence, but if dad lived there and you 'moved out' (ahem!) I doubt there's be a problem. Of course, eligibility might be impacted by his age - how old is he?

If you and dad jointly buy together, then you will no longer be a FTB for SDLT purposes.

And mortgage lenders will certainly take into account the fact that you already have a mortgage when assessing you for a 2nd one in your sole name.

He is currently 64, so pretty impossible to get a mortgage! Very good point about difficulty in getting a second mortgage, as I would want to try to put a deposit down in the next few years.
Thanks for your advice!

lauramoneysaver

Lover_of_Lycra said:

lauramoneysaver said:

Hi,
My dad has £40,000 in savings but is currently renting a 1 bed flat. He will be retiring in the next few years, but it's very expensive to rent where he is and he is having to dip into his savings to make ends meet. I'm an only child and worried about his savings depleting and not having a safety net to look after him in old age, and I also want him to be able to live somewhere he can call home. I am living in London and saving for my own deposit (a bit far off still!) but I am starting to think he/we (I am more likely to be given a mortgage) should buy a flat that he can live in with a good chunk of his money as a good deposit so at least it is invested that we can take money out of if and when he needs to move into somewhere with more care when he is a lot older. I guess my question is, will it be possible for me as a first time buyer to buy a house with him and him live in it, does this need to be a rent to buy mortgage or is it different if its family? Can it just be a normal mortgage? And when I am ready to put a deposit on my own flat, would it affect my first time buyer status if I bought for him/cosigned with him? Would it make it harder for me to get a mortgage if i am already down on a flat that my dad is living in?

Hope that makes sense! I am very new to the world of mortgages and I don't think this is the most common of situations!

Thanks!
L

What's a rent to buy mortgage?

If your dad is only a few years away from retirement his mortgage options are going to be very limited.  Any mortgage he is eligible for, even with you, is going to have a very short term.  If you were to use his savings as the deposit and get a mortgage on your own that would pose a large problem for many lenders since the deposit would be coming from someone living in the property but not party to the mortgage.  What kind of mortgage would you get?  Not a residential mortgage because you wouldn't be residing in the property?  A Buy to Let mortgage?  If so it would need to be regulated to let to family and would you be charging your father rent?  If so you would need to declare that to HMRC.

If you buy the property jointly or by yourself you will have to pay SDLT.  The relief for FTB is only from properties the FTB intends to live in as their only or main home.  When you then come to buy your own home the purchase will be subject to the higher rate of SDLT.  You wouldn't get and HTB ISA/LISA bonus when you come to buy and the mortgage on your father's home could impact your affordability.

More practical solutions would be for your father to move to a less expensive area, to check what benefits he maybe entitled to now and/or when he retires, to look into sheltered housing for the over 55s from the council or local housing associations. 

Hi, sorry, what I meant was a Buy To Let mortgage. Thank you for your advice - you've raised some really valid points. 

knightstyle

'He is currently 64, so pretty impossible to get a mortgage! '  Not true, many lenders do mortgages for people in their 60s.  But most must be repaid before they reach 80!
I know as I am trying to get a small mortgage so we can move and I am in my 70s.

hb2

Your father is 64, so hardly in his dotage, have you discussed this with him? What does he want?

dimbo61

My Dad has lived in a over 50,s sheltered flat for the last 15 years and is very happy with his own space.
Help Dad look for a flat by checking out online what is available in his local area and which housing associations there are.
Help him save money by using Money Saving Expert tips on reducing his bills.

theartfullodger

Mortgages can go to age 80: I've got one , had another until I paid it off a couple of months ago.  Approach a couple of brokers and see what they suggest.  Covid may have tightened the options...

Artful: 72.

knightstyle

Just got an offer from Leeds BS for a mortgage which will end in 9 years time when I am 84.
So they are available.

The_Posh

Hi - am looking for lenders who are ok with borowers over 55 (I'm 58, looking for a 20 year mortgage) - any suggestions?