Options to help mother move

sghughes42

My mother has lived in the same house for over 50 years now, but is more and more wanting to move somewhere better. I think she regrets not moving many years ago, but is now in a position where she herself has no means to buy a new house.

We are in the position where we are fairly comfortable, our mortgage is about 50% of the property value but we are overpaying and should be clear in 8-10 years. We still have 4 years of our current deal to run.

What is the best way for me to help her move? Can I go on a mortgage with her? Can I buy a house as a BTL for her to live in then she sell her existing house, give half to my sister and pay me 'rent' from the rest? Are there any other options? She has little income beyond state pension and the part of my father's civil service pension she still gets, and at 75 she is not going to get a mortgage herself. I'm assuming that as it would be my second property we'd get stung for the stamp duty surcharge?

House is only worth £60-70k (North East mining village...) but we seem to be looking at £150k+ for a decent bungalow in a better town in the same area. I could put up 10% out of my own savings, but if we stopped overpaying on our mortgage could easily build up to 20% within a year or so.

I know she wants to move, partly because the house is more and more awkward for her (steep stairs, bathroom downstairs, no shops in the town and poor buses), but I can't see what we can do to help most effectively...

princeofpounds

You don't really give us enough information for a considered judgement.

Forget the BTL idea. A lender would not accept the tenancy of a family member. It also leaves her with no security of tenure if something bad happens to you and/or your arrangement.

You can potentially go on a mortgage with her. But she is too old to raise a mortgage, and her paying you money won't be counted as income, so you won't be able to pass the affordability check most likely. Plus yes, additional stamp duty. 

You could remortgage to raise more capital against your own home, then lend that excess to your mother. Not sure if you could bridge the gap though, again not enough information.

You could both sell up, and see if you can find a suitable property to own together with an annex or other secondary dwelling.

What does your wife/husband think about your plan to bung your mother 10-20% of your savings?

xylophone

Is there any possibility that she might qualify for rented housing for older people?
Are there any schemes near you?

https://www.thirteengroup.co.uk/page/sheltered-accomodation

dimbo61

Can you not look at over 55 sheltered housing developments in an area she likes or near you ?
Mum could sell her home and the whole family could help Mum find a new apartment and move her in.
My Dad did this 16 years ago and has enjoyed living in a small property with a group of other residents over 55.
No maintenance to worry about, easier to keep clean and tidy, all on one level.
On site warden and only rent to worry about.
Mum can enjoy her money and have lots of holidays, run a car, treat the grandkids

[Deleted User]

Why would mum give away half her equity to your sister? 

youth_leader

I'm in Northumberland and there is a popular scheme in Shilbottle, I think they offer housing in other areas too.  
Home - JJH (jjhousing.co.uk)

saajan_12

1) If you buy the house
-> need a regulated BTL mortgage (as you're letting to a family member)
-> Additional 3% stamp duty upon purchase & capital gains tax upon sale
-> No security for mother if relations sour and you want to part ways.

2) If you buy jointly with mother
-> need to speak to a broker re what mortgage options are available if any - to either only use your income, or some sole borrower / joint owner deal. Not sure if that exists
-> Additional 3% stamp duty on the full purchase price and Capital gains tax on your share upon sale

3) If mother buys the house outright with a loan from you 
-> depends on if you can remortgage your home to take out more equity. Will that + your savings + equity in mother's house be enough to buy a new property? 
-> You could write up a loan from you to mother, part repayable monthly and the rest repayable upon sale or out of her estate.  Make sure you agree the interest rate (0%? equal to your remortgage interest?) and repayment schedule (as your mortgage would increase)
-> No additional SDLT or CGT 
-> No income tax on rent as mother isn't paying you rent - it would be repayments on a loan. If you charge interest, then that would attract income tax above your annual allowance. 

Personally I would do (3) but only works IF there is enough equity in your own house and you can pass affordability. 

wilfred30

sghughes42 said:

House is only worth £60-70k (North East mining village...) but we seem to be looking at £150k+ for a decent bungalow in a better town in the same area. 

What size is the house she currently lives in?  Presumably it's a 2 or 3 bedroom as you and your sister presumably grew up there.  

Can she move to a 1 bed bungalow as, presumably, that wouldn't cost more than twice as much as her current house.  

boots_babe

We did similar to help my parents 4 or 5 years back. We didn't want to be hit with an additional stamp duty fee for a second property, but wanted to help them to purchase somewhere nearer to where we live (they were 3 hours drive away) so that we could look after them when needed. After taking legal advice, we went down the route of a Declaration of Trust. This enabled my parents to be the owners at the Land Registry, but the Declaration is registered such that when the property is sold, we effectively have a first charge on the property for 1/3 of the value, and will get the monies back.

Good luck.

moneysavinghero

If the bathroom being downstairs is a problem, why are you looking at bungalows?

wilfred30

Presumably, the problem is the fact that the bathroom is on a different floor to her bedroom.