Buying house with parents

Mickey666

Would the parents consider just gifting the money so the OP could by the house in their name only?  I know there are potential issues but the OP seems to be happy with the family dynamics so let's avoid pointless speculation in that regard.

An outright gift would avoid the issue of mortgage term, though the lender might have issues with a part part of the equity being a gift - but that will be easy to determine, one way or another.  My bet is that there'll be a lender out there who will accept it.

There's also the possibility of IHT implications if the both the parent don't survive seven years.  My understanding is that if it is a JOINT gift (easy to prove by being paid from a joint account) then as long as one parent survives for seven years then the 'PET' is not broken.

The other big issue for anyone in their mid-70s is the potentiaal issue of deprivation of assets in case of care-home issues later in life.  This whole subject seems very unsatisfactory to me because there are too many variable and it's all too subjective.  Is it 'reasonable' to assume that someone in their 70s is going to need to go into a care home in later life?  Is it reasonable to assume that someone in their 60s won't?  Or their 50s?  This whole area just seems like a lottery to me, which makes financial planning of this sort pretty much impossible.  I would hope that people, councils, governments etc would give credit to any family embracing the 'extended family' approach of a multi-generational home, where the elderly parents can be closely looked after and not have to fend for themselves all alone, even if they are in reasonable health.  Unfortunately, 'the system' doesn't seem to do that and cash-strapped councils (aren't they always?) will always try to minimise their own social spending, even if the extended family has provided, say, 10 years of 'pre care home' care to parents who might otherwise have needed some level of community care.

Our whole approach to elderly care could do with a complete overhaul really.  Meanwhile, I'd say the OP is to be applauded for thinking ahead in this way. If only more people would do the same, our elderly care provision might not be as poor as it is.  But that's a whole other topic!

Thrugelmir

Mickey666 said:

Would the parents consider just gifting the money so the OP could by the house in their name only?  

The money is being used to purchase a property that will become their home. For all intents and purposes it's therefore not viewed as a gift. The act is simply one of circumnavigation. 

egadsby

Thrugelmir said:

Mickey666 said:

Would the parents consider just gifting the money so the OP could by the house in their name only?  

The money is being used to purchase a property that will become their home. For all intents and purposes it's therefore not viewed as a gift. The act is simply one of circumnavigation. 

What’s being circumnavigated? They’ve paid for half and we will pay for the other half. 

Again, over simplifying but what are we trying to get round? Deprivation of assets?

MWT

egadsby said:

What’s being circumnavigated? They’ve paid for half and we will pay for the other half. 

Again, over simplifying but what are we trying to get round? Deprivation of assets?

You are trying to get a 100% mortgage on your half by disguising the payment for the other half as a 'deposit'...

... or at least that is the way it looks from the lenders perspective...

... and you will potentially only have a claim on 50% of the property, not the 100% that the LTV would be calculated on...

Thrugelmir

egadsby said:

Thrugelmir said:

Mickey666 said:

Would the parents consider just gifting the money so the OP could by the house in their name only?  

The money is being used to purchase a property that will become their home. For all intents and purposes it's therefore not viewed as a gift. The act is simply one of circumnavigation. 

What’s being circumnavigated? They’ve paid for half and we will pay for the other half. 

Again, over simplifying but what are we trying to get round? Deprivation of assets?

I'm merely stating the lenders macro view of this type of situation and why they take the stance they do. People at the micro level far too often believe otherwise. That dressing it up so to speak creates a different scenario that should be acceptable to lenders. 
Bottom line is that lenders require adequate security for the monies being advanced and the freedom to call in the debt owed, without hinderance, should the mortgage contract be breached . 

SpiderLegs

egadsby said:

Thrugelmir said:

Mickey666 said:

Would the parents consider just gifting the money so the OP could by the house in their name only?  

The money is being used to purchase a property that will become their home. For all intents and purposes it's therefore not viewed as a gift. The act is simply one of circumnavigation. 

What’s being circumnavigated? They’ve paid for half and we will pay for the other half. 

Again, over simplifying but what are we trying to get round? Deprivation of assets?

 No, they will pay for half and the lender will pay for half. Lenders don’t often want the hassle of just owning half a house.

gizmo111

How much could you borrow, if say they gifted you the deposit out of savings and then sold and moved in with you when the house is in yours and partners name? 
Would you be able to raise enough on a mortgage for the size of property you would need?

ilsy

egadsby said:

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

People are trying to help by giving you all sorts of advice and covering all angles even though you may have not asked for it. Your reply is rather harsh.

AnotherJoe

A few years ago I looked into this (slightly different as I had no intention of living in the property). Splitting a property with my daughter. Both of us on mortgage That was doable in theory but not practice because at my age (late 50's then) the mortgage term was very short which meant the repayment were huge and way beyond my daughter. 

Your parents have 20 years on me so speak to a broker but I think this will be a non starter because of that even if you can find someone to lend, which itself will be a very small pool.

p.s. I believe that the parents "gifting" £200k* to you and living in the property and not being on the mortgage is a non starter unless you commit mortgage fraud and state that no one else will be living there with you.

* Its not a"gift", its in consideration of a place to stay.

egadsby

ilsy said:

egadsby said:

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

People are trying to help by giving you all sorts of advice and covering all angles even though you may have not asked for it. Your reply is rather harsh.

Oh well.

I did try and be specific about the type of advice I was after. Some of these posts have been really useful and have given me much to consider. That post read like a bitter account of something that had gone wrong in their lives. How is that useful from a financial/legal point of view? All multigenerational households are unmitigated disasters are they?

Again, thanks for contributing - I am now in touch with a broker.