Mortgage and Inheritence

Tron103

Hi!
Not sure if this is the right place so apologies in advance if not!

My parents currently live in the north of England but are getting older and Covid has taught us that the distance isn’t easy (my sister and I are both in the South). They would like to relocate but would not have enough money to buy a property outright given the difference in housing costs.

Does anyone know if it would be possible for them to their current property and gift money to me which I then use to as a deposit to take on a second property. They would then live in that property and pay rent (a lower rent to cover mortgage + bills only). Essentially this would allow them to live in a better property in an area close to us but I would take on the risk / debt of an additional mortgage. 

Or does anyone know what type of financial / mortgage advisor I should speak to to figure this out?

ACG

It is not quite that simple. A gift should be a gift, but in this case it would be a gift with strings attached (ie you buy them a house they can pay "rent" on at a reduced rate and presumably you cant kick them out). 

You then have to look at paying tax on rental income and possibly capital gains tax if the property goes up in value as well as higher rate stamp duty with it being a second property.

An alternative could be that they take out a lifetime mortgage/retirement mortgage - this would mean they can put their money down on a new place and either:
1) Not pay anything, but the equity gets eaten into and potentially may leave no inheritance or no money for a decent care home should they need it. 
2) Pay interest only and they still keep the equity, but their income would usually need to be able to support the new mortgage. 

Probably a good idea to speak to a broker who can do lifetime mortgages as they will have experience with the options in that part of the market. Not all mortgage brokers are qualified in lifetime mortgages.

getmore4less

What sort of numbers are looking at to bridge the gap between what cash they have and what is needed to bu something?

Tron103

Hmm I had a feeling it may not be as simple as I was hoping - this helps a lot!

They are probably around £100,000 short to buy somewhere that is comfortable / in a nice area. They have a good pension so a monthly income of around £2,000.

Thrugelmir

Tron103 said:

Hmm I had a feeling it may not be as simple as I was hoping - this helps a lot!

They are probably around £100,000 short to buy somewhere that is comfortable / in a nice area. They have a good pension so a monthly income of around £2,000.

Without wishing to sound morbid. That £2k would be a lot less when one of them eventually passes away.  The planning needs to consider all scenarios. 

Keep_pedalling

You say that you will be taking on the risk, but they would be giving up the security of having their own home, to rent from you. What happens to them if for some reason you run into financial difficulty, though illness, loosing your job or getting divorced? What happens to them if you die first?