Buying house with parents

egadsby

Hi everyone - I'm hoping this is the right forum for this, as my question relates only to the legalities/financials of this situation.

My partner and I have three year old twins and rent in a very expensive area that we could never afford to buy in. My parents are in their mid-70s and have a house of which they have approx. 200K equity.

We have brought up our family with virtually no hands-on support and now we are thinking that we want to be closer to my family. We have discussed living together quite extensively and it solves a lot of problems for all of us. In principle we have decided that this is what we will do. The children get to know their grandparents and my parents get support from us as they get older.

The money bit - we have no savings, but fairly well paid jobs. My partner starts back at her position in September after a 2 year sabbatical. Frustratingly, like a lot of people, we could easily afford to pay off a mortgage, but it's difficult at the moment to get the deposit together. The plan we have discussed would mean that my parents would sell their house and the money from that would be used as a deposit on a larger house which we would all live in, say 400K to be used as an example. My partner and I would be the only parties paying the rest of the 200K.

I am aware that sometimes people gift their estate so as to avoid inheritance tax, but would there be anything else preventing us from achieving this?

Also, I know living with in-laws might not be everyone's cup of tea and there are risks such as things not working out in the future if we can't stand living with each other - I really am only interested in whether or not legally we could make this work.

Thanks for reading and also if you can offer any advice.

MovingForwards

Parents are mid 70s, the mortgage term will be based on the oldest out of all four of you.

Supposing you / your wife split / divorce, or the in-laws split / divorce and the house has to get sold as part of the financial settlement.

Or finance takes a massive downturn, one or more of you ends up bankrupt, the house is then at risk.

What happens if you/wife or in-laws decide it isn't working and want to go back to separate living?

How much care / babysitting can the in-laws really provide for your kids at their age?

As the in-laws health (potentially) declines in the future and one or both require round the clock care. How will one or both of you do that, together with working, raising a family? Which of you would give up work?

How would you apportion bills / property maintenance?

Do the in-laws have any savings?

Does your wife have siblings? 

It's one for a broker.

egadsby

MovingForwards said:

Parents are mid 70s, the mortgage term will be based on the oldest out of all four of you.

Supposing you / your wife split / divorce, or the in-laws split / divorce and the house has to get sold as part of the financial settlement.

Or finance takes a massive downturn, one or more of you ends up bankrupt, the house is then at risk.

What happens if you/wife or in-laws decide it isn't working and want to go back to separate living?

How much care / babysitting can the in-laws really provide for your kids at their age?

As the in-laws health (potentially) declines in the future and one or both require round the clock care. How will one or both of you do that, together with working, raising a family? Which of you would give up work?

How would you apportion bills / property maintenance?

Do the in-laws have any savings?

Does your wife have siblings? 

It's one for a broker.

Ok thanks, but I'm only asking whether or not it can be done, not so much about support from parents or given to parents, or what happens if it all goes wrong. I did try to emphasise that in the post.

The mortgage term will be based on the oldest out of all of us - could you elaborate on that a bit please. They would have sold their house and given us the money. We would buy a house with that as the deposit and they would live in it with us. I know I'm really simplifying it, but just to get an idea.

MovingForwards

As you've said the parents are in their 70s that means potentially a shorter mortgage term. They would have to be on the mortgage because of contributing to the purchase, being on the title deeds and living in the property.

Lenders have an upper age limit for mortgages, due to the in-laws being older, it will go off the age of the oldest of all four of you.

Speak with a broker to see what is viable and the potential options available.

egadsby

MovingForwards said:

As you've said the parents are in their 70s that means potentially a shorter mortgage term. They would have to be on the mortgage because of contributing to the purchase, being on the title deeds and living in the property.

Lenders have an upper age limit for mortgages, due to the in-laws being older, it will go off the age of the oldest of all four of you.

Speak with a broker to see what is viable and the potential options available.

Thanks. Would they need to be on the mortgage though? They would have gifted the money to us and we would use it to buy a house. The fact that they would live there too - we could have anyone living there in theory and they wouldn't be on the deeds.

MovingForwards

That's why I asked questions in my other post.

Gifting £200k at their age could lead to deprivation of assets allegations if they need to move to a care home, need to claim top up benefits, have a carer come into the house etc.

Yes, you can have anyone living with you. The lender will probably need to be aware and the in-laws will have to sign a document to say they will leave if the property is repossessed etc.

Don't know if a lender would be happy with approving a mortgage where the deposit has been provided by someone living in the property but not on the mortgage / deeds.

Thrugelmir

egadsby said:

MovingForwards said:

As you've said the parents are in their 70s that means potentially a shorter mortgage term. They would have to be on the mortgage because of contributing to the purchase, being on the title deeds and living in the property.

Lenders have an upper age limit for mortgages, due to the in-laws being older, it will go off the age of the oldest of all four of you.

Speak with a broker to see what is viable and the potential options available.

Thanks. Would they need to be on the mortgage though? They would have gifted the money to us and we would use it to buy a house. The fact that they would live there too - we could have anyone living there in theory and they wouldn't be on the deeds.

You'll need to declare the source of the deposit and the fact that your parents will be living in the property. Far more complex than simply gifting you their money. The money is in effect buying their future accomodation.
Google depreviation of assets as well, That money maybe required to pay care home fees. 

MalMonroe

This just sounds like an unmitigated disaster to me. Whichever way you look at it. Financially, living with in-laws, everything. Living with anyone's parents when you are an adult with your own children is hell. I've done it. Not only lived with parents but years ago my then-partner and I also tried living with another couple - in order to cut bills - we all had children and we don't speak to them any more. That hurts because we were really close before we decided to live together. I know that's not what you're asking but to commit yourselves to buying a property with anyone, including elderly parents, is really a big backward step.

If you are thinking that because they are in their 70s they won't be here much longer, and then you'll be home free, please think again. People are living much longer these days. I just turned 70 and don't want to be going anywhere for a while yet. But I'd hate to be living with one of my adult kids and their kids.

I'd rather live in my very own shoebox with my very own family than try to share with any parents or parents-in-law. Or any family. That way disaster lies. Once your finances are all tied up together, you could be well trapped for the next twenty years. 

egadsby

MalMonroe said:

This just sounds like an unmitigated disaster to me. Whichever way you look at it. Financially, living with in-laws, everything. Living with anyone's parents when you are an adult with your own children is hell. I've done it. Not only lived with parents but years ago my then-partner and I also tried living with another couple - in order to cut bills - we all had children and we don't speak to them any more. That hurts because we were really close before we decided to live together. I know that's not what you're asking but to commit yourselves to buying a property with anyone, including elderly parents, is really a big backward step.

If you are thinking that because they are in their 70s they won't be here much longer, and then you'll be home free, please think again. People are living much longer these days. I just turned 70 and don't want to be going anywhere for a while yet. But I'd hate to be living with one of my adult kids and their kids.

I'd rather live in my very own shoebox with my very own family than try to share with any parents or parents-in-law. Or any family. That way disaster lies. Once your finances are all tied up together, you could be well trapped for the next twenty years. 

Ok mate. Thanks for the advice we didn’t ask for. 

MWT

Talk to a broker, there isn't much more anyone can add that doesn't drift into the territory that you don't want to talk about.

They will be best placed to tell you if they think it can be achieved or not in the current climate.

These days the source of the deposit matters, especially when the source will be occupying the home as well.

You have a good LTV though if you stick to your planned £400k purchase and £200k deposit but their age will be an issue so the sooner you start working with a broker the sooner you will know if what you want is achievable.

trex227

It is possible but it’s quite complicated. When I worked at a solicitors a couple did the same as you propose with her parents. As others have said I don’t think any mortgage lender will accept a gifted deposit from someone who will live in the property (though I don’t know for sure) so all 4 had to go on the mortgage. I know they only had 1 mortgage lender option (it may have been HSBC, though I might be wrong). This was 4 or so years ago so this option might not still be available.

As has been said you would first need to see a broker to discuss what options are out there. Then a solicitors for legal advice.

I don’t think there was any way to protect against care homes fees- they just had to accept they may have to sell/have a charge on the property if care homes were required for the parents.