Buying house for outstanding mortgage

Corblimeyskip

Hi....... looking for advice to help father.
Hopefully I’ll cover all needed information..........my father wants me to buy his house as he is struggling to keep up mortgage repayments since having a stroke.  His disability benefits doesnt cover the mortgage monthly repayments so every month is a struggle. He has just found out that a family member can now buy the house off him and he can then claim housing benefits to rent the property. But, the original plan was, when he kicks the bucket......the house would be shared between me and two siblings. I would be buying the house at minus my inheritance price.
However, benefits have said that if he sells the house he will no longer be entitled to benefits as he would have a large sum of money as he doesn’t need to give the profits from the sale to my other siblings. So, is it possible to buy the house at whatever is outstanding on the mortgage and then I will gift the siblings their share at an agreed date? 

 

SpiderLegs

Corblimeyskip said:

He has just found out that a family member can now buy the house off him and he can then claim housing benefits to rent the property. 

 

Have you heard of the term ‘contrived tenancy’?

MWT

"deliberate deprivation of assets" is the other potential problem, this is something you need to take professional advice on as you are walking into a minefield...

getmore4less

The simple solution is the three of you help him out by lending him the money for the mortgage

Windofchange

One can only assume there isn't a huge amount outstanding on the mortgage? So, you are going to buy the house at a massively discounted amount? How are you then going to give your two siblings anything at a later date? Are you then going to have to re-mortgage the house to pay them off? Sell it once he passes? And yes, he will not be entitled to benefits if he has gained xyz hundreds of thousands from a property sale. As per the above, deprivation of assets comes into things too. 

Can you go into a deed of trust with your two other siblings and buy the house as a 33% share each? Not sure what sums we are talking and whether you would all pass affordability, second home consideration etc etc. The issue then is dad has a large sum of money and you will end up paying for his care.

If it were me in this situation, I would simply top up the mortgage for him alongside my siblings as long as we are only talking a small amount per month. My parents as an example have a mortgage of about £350 a month, so if it came to it, between me and my brother we would just pay Half each - don't think the taxman or anyone needs to know though I could be wrong. 

Corblimeyskip

Thanks for the replies………
im the only working child………..other two are still in education. The idea would be that I bought it at what was outstanding on the mortgage, around 20k. Then remortgaged on an agreed date. I shall look at the deprivation of assets as it’s the first I’ve heard of it.
I live 300miles away and still rent so have no desire to live in the house, would want to keep it for when I’m older and ready to move back home

MWT

Corblimeyskip said:

I shall look at the deprivation of assets as it’s the first I’ve heard of it.

The short version is that you can't give away significant assets in order to qualify for means-tested benefits.

Especially if the department involved has already warned him about the impact of selling the house.

How old is your father now and what would the real market value of the property be?

He may have other options but you do need help with this to avoid making a simple error that leaves him worse off than he is now.

Corblimeyskip

He is 57………the outstanding mortgage is £27500 and the house is around £120-140k in its current state. 

Would a financial advisor be best for this situation?

MWT

A financial advisor and probably a solicitor at some point, but think though the possibilities first and seek advise once you have an idea how you want to proceed...

Easiest solution if you can do it is probably to have you payoff the mortgage and secure your interest with a charge on the property but leave him as the owner.

There are other practical matters such as is it really just the mortgage he is struggling with or is he having problems maintaining the house as well?

Selling is always an option, especially if it leaves him able to downsize and release some capital at the same time, but a lot depends on local property prices as well of course...

An advisor may have other suggestions of course...

Corblimeyskip

Thanks for the input

AnotherJoe

There's also an impact upon you, you say you are renting, so presumably don't own a house and have not owned one, if so you would lose your first time buyer benefits if you ever decided to buy a house elsewhere. 

On the face of it the simpler and better solution would be as another poster mentioned,  you pay the mortgage, in one go or just take over the monthly payments, but asa loan, not a gift. That way your money is protected should the house ever need to be sold,  plus he doesn't have a large sum of money that would need to be spent down to get him back on benefits. If you just give him the money then some benefits would be removed or reduced so in effect you'd just be paying his benefits for a while. Same for, say the house needs £10k spending on it to fix the roof or whatever, you make thata loan.then if the house ever needs to be sold to pay for his care, your money is protected. 

This also avoids issues such as, imagine you got into  bad financial trouble and became bankrupt. If you owned his house, he would be evicted as it was sold to pay your debts.