Buying with daughter

BurtieW

We are thinking of selling our property and moving in with our married daughter. We would provide a 50% deposit from the proceeds of the sale and they would obtain a mortgage for the remaining 50%.
I know there are pitfalls and issues, but what is the best way to proceed.
We are both in our mid 60s so don't want to appear on the mortgage as it would restrict their repayment period. 
Obviously we want to protect our investment without making things too complicated (we have two other daughters).
Can anyone help, or offer advice?

pbartlett

what do you mean by protect your investment?

one way would be to register a second charge on the property although you might need the agreement of the first charge (mortgage) to do this. 

AdrianC

Relatively few lenders will allow only a subset of joint owners to be borrowers - it would make repossession virtually impossible.

One option would be for you to lend her your 50% with a charge against the place - but that would be a massive borrowed deposit, which will make the mortgage difficult, and you would have to have second charge.

Another option would be for you to gift her the equity - but that raises problems with deprivation of assets if ever you need care.

Neither would provide you with security, either.

BurtieW

We are quite happy to gift the money, and not appear on the deeds etc, but would need some sort of agreement that we would be protected if the house is sold or in the unlikely event if marriage break up. It seemed a really good option, but is it?

unforeseen

It would cease to be a gift if you put in place a process to claw back the money. This would border on mortgage fraud. 

AdrianC

BurtieW said:

We are quite happy to gift the money, and not appear on the deeds etc, but would need some sort of agreement that we would be protected if the house is sold or in the unlikely event if marriage break up.

That doesn't sound much like a gift... More like a loan... Gifts don't carry strings.

And what about when/if you need care?

BurtieW

We are not trying to defraud anyone! It all seemed simple initially. My daughter and her husband have a mortgage quote in principal, and we have the funds for 50% of the.property. surely there must be some way of us buying a property together? A gift? A loan that is only repayable if the house is sold? Care is not an issue as we would be looked after at the premises if that is needed (and hopefully not for a long time as we are only 64 and fit and well).
Help!

elsien

You need to consider if you gift the money what would happen if there was a change of circumstances and either you or your daughter wished/needed to end the arrangement. 

I’m not thinking specifically of care home fees, but just life and that none of us have a crystal ball. Can you afford to lose the money. Because if you’re gifting it, that is the bottom line. 

AdrianC

BurtieW said:

Care is not an issue as we would be looked after at the premises if that is needed

No, no, no, no, NO! You simply cannot expect that. It's unreasonable and cruel to your family, and it's quite often going to result in worse care for you.

The only sensible way forward is for you to be joint borrowers with your daughter and your son in law. It may well not affect her affordability. Do they have any equity of their own?

But, with your finances tied up with theirs, you will inevitably be exposed to a situation such as divorce or bankruptcy - and they to you needing to release equity for care. You're right that care is a long way in the future... but, as you say, you're only in your mid 60s - not even retirement age - and, presumably, your daughter in her 30s?

Do they actually WANT to live with their parents/in-laws for the next two decades or more...?

BurtieW

AdrianC said:

BurtieW said:

Care is not an issue as we would be looked after at the premises if that is needed

No, no, no, no, NO! You simply cannot expect that. It's unreasonable and cruel to your family, and it's quite often going to result in worse care

No, we are not talking about our daughter looking after us... if required we would be buying in care, and we are looking at properties with self-contained annexes.
We have discussed all this at length and we are not being cruel to anyone.
Our daughter is in her thirties and most of this was her idea ... we are very close and we're always planning to move in together at some stage.
They have no deposit and werr finding it impossible to get on the property ladder even though our son-in-law has a well paid job. They have two small children who we look after most of the time anyway (support bubble) as our daughter is clinically vulnerable.

macman

BurtieW said:

We are not trying to defraud anyone! It all seemed simple initially. My daughter and her husband have a mortgage quote in principal, and we have the funds for 50% of the.property. surely there must be some way of us buying a property together? A gift? A loan that is only repayable if the house is sold? Care is not an issue as we would be looked after at the premises if that is needed (and hopefully not for a long time as we are only 64 and fit and well).
Help!

Right, so with a 25 year mortgage, you'll be 89 before the mortgage reaches redemption. The lender will want to protect their investment throughout the term of the mortgage, not just at the start.