Buying house with substantial gifted deposit

Willow89

My grandfather died recently, leaving my grandmother (88) in a house that is much too big for her to manage on her own. We have been looking at smaller alternative living arrangements for her and have just secured a rent to buy retirement property for her. 

My husband and I were in the process of buying our first house, however, this has fallen through and my grandmother has suggested perhaps we should all live together. She said she would be willing to pay a substantial deposit (around £200K) for us to be able to buy a property big enough to accommodate us all. My husband and I think this could work, we all get on well and it would mean that my grandmother would get to spend her final years with her great-grandchildren and it would be easier on the whole for all of us... but I have concerns about how gifting such a big deposit would work, if it is even possible and what would happen with tax etc should she pass away? 

Any advice appreciated. 

gettingtheresometime

My first thoughts are no don't do it....as are my second and third.

Not from a house purchasing pov but a family dynamic one.

All very well & good now when grandma is relatively fit & healthy but what happens when that isn't the case? 

AdrianC

It all sounds so perfect and lovely and multi-generational and baby-sitter-on-tap, doesn't it?

But do you and your husband really want to live in your first home with your 88yo+ grandmother? For potentially the next decade?

If she gifts you the money, then what happens if/when she needs residential care? That £200k will be seen as still being part of her assets. Can you afford to pay the £200k back, or pay up to £200k in care fees?
And, PLEASE, don't say "But we wouldn't ever put her in a home..." - not unless you have first-hand experience of giving up your job to care for somebody who's doubly-incontinent, bed-ridden, and doesn't know who you are so is terrified of you... No, it might not happen. But it might... Dementia is HORRIBLE, and very common.

So can she lend you the money? Again, what if/when she needs it back? And how will your mortgage lender react to £200k loaned equity?

Or would she be a joint owner so joint borrower?

Are there other relatives who may (will!) fight for their share of that money on her death?

Can you afford to cover the mortgage if one of you gives your job up to care for her?
What happens if the stress of caring for her causes your marriage to fail?

Tiglet2

Another one here who says don't do it.

It's not a problem while grandmother is still fit and healthy, but it may not last and unless you intend to pay for carers, the bulk of looking after her will fall to you.  Do you think that's fair on your husband and children - going out for the day and holidays would be difficult to arrange, without the guilt aspect.  Of course, you could look at residential care, as other people have suggested, but the cost is upwards of £1200 per week, so consider that too.

On the other hand, she may be fit and healthy until the inevitable happens.

Another way of looking at it is the potential loss of your freedom for an unknown number of years.  Much as I am sure you love your grandmother, you do not want to come to regret this decision.

Willow89

Thanks for the comments so far.

As a family we've talked at length about the pros and the cons and the what if's... There is only my brother and I that would stand to inherit anything and thankfully, we are not money orientated kind of people and neither of us is bothered about any kind of inheritance only what is best for our grandmother. 

I should add that while my grandmother is of complete sound mind, she is pretty frail and already requires some help with day-to-day such as shopping, cleaning, bill paying, bathing etc... she WILL NOT go into a care home, it's completely out the question and our thinking is that having everyone under one roof might be easier and better for us as a family. 1 House to clean, 1 lot of bills to pay for etc and would mean that I am around more for my own family. 

Caring is hard, I know that (having cared for my mother since age 15), my freedom is already lost and I am prepared for what may come. If it came to it, we would manage if I had to give up my job to care for her. My husband is supportive and even though this would be our first bought house together, we have lived together over 10 years...

pinkshoes

I think it is actually a really nice idea.

But... you will need a back up plan in case your gran needs care more than you can provide. I appreciate you cared for your mum, but have you cared for someone with dementia? You could potentially need 24 hour care for her should she lose her marbles... So will need some way of paying for this. She cannot just give you £200k of equity if that leaves nothing for her care costs (deprivation of assets). You would need to potentially consider round the clock or a nursing home if it got too much to handle. 

My friend's mum did this but the gran eventually had to go into a care home as the dementia got too much to manage on their own. She couldn't even go and have a shower without the worry of something happening. e.g. she left the gas on, doors wide open and just wondered off etc... frightening. 

What are the figures e.g. how much would the house be, how much do you have (cash) and how much cash does she have? You would perhaps have to make sure she has cash savings to pay for her own care if needed, or she owns a share of the house as tenants in common. 

Edit: care home costs can be £600 to £800 a week. So for 2 years this is over £80,000!

Hannimal

gettingtheresometime said:

My first thoughts are no don't do it....as are my second and third.

Not from a house purchasing pov but a family dynamic one.

All very well & good now when grandma is relatively fit & healthy but what happens when that isn't the case? 

I could not disagree more. I am actually genuinely upset by this comment. My dad died of dementia last year and my sister and her family moved in with my parents to help out because that was easier than supporting remotely. The idea of refusing to live with an elderly relative in case they fall ill sounds cold and callous. 

Hannimal

I am so disheartened by the comments in this thread. 

Willow89

Thanks pinkshoes... 

Even if my gran gifted us £200K, there would still be enough money left over from the sale of her house and savings/investments to pay for any potential care cost, IF it ever came to that. I just want to do what's best for my Gran and support her for as long as I'm able to. 

l0islane

I don't have a comment on whether you should do this, I can see the pros and cons but as someone whose father had dementia and had to go into care you can't ever say you will never put someone in a care home.  We tried for as long as humanly possible but my father could not be alone, he would scream our names if we left the room until we came back, he became threatening and on occcassions violent when he didn't recognise who we were. He had hallucinations and would think we were keeping him prisoner and would fight us to 'escape'.  After he went into care we found he had hidden objects to use as weapons. Sometimes he would get up multiple times during the night and bang on the walls or my bedroom door and wouldn't return to bed. This was on top of the daily general care he required to simply eat, wash, get dressed etc. (he wouldn't cooperate with any carers we tried to bring into the house) It was heartbreaking to have to put him into care but honestly there felt like there was no other option. Hopefully it never comes to that for you, but you need a plan for worst case scenario.

Scotbot

You might not put her in a home but it may not be your decision . If they think it appropriate social services can and will overrule you. So you need to be prepared for the fact that the 200k may have to go towards care which means you would have to sell. It costs around 80 k per year for care.  As long as you are aware of that it is your choice.