Moving in with mum and partially buying her out.

kirsteen0603

My mum is in her 70s and while healthy and active we are looking to move into her house and extend to accommodate us all. Plan is my mum to maintain a third ownership and us the other two thirds. Has anyone ever done this? And is there mortgage options to allow this ( mums third will be purely equity - and the 2/3 we buy will be cash for her retirement with a about 50% equity). I’m struggling to find the implications of this and mortgage options for us. We are in Scotland.

eddddy

Unfortunately, you can't mortgage 2/3rds of a property.

(If you failed to pay the mortgage, how could the mortgage lender repossess 2/3rds of the property, and then sell 2/3rds of the property?)

If a mortgage is needed, it will have to be a joint mortgage between the 3 of you.

But you can agree between you who pays the mortgage repayments (e.g. maybe only 2 of you pay the mortgage), and who gets what when the property is sold - you can even sign an agreement about it if you want.

But if the mortgage isn't paid, the lender can chase any or all of you for the money - and if the house is repossessed, all 3 of you will have to move out.

You might also want to agree who pays for insurance, council tax, utilities, repairs, maintenance, etc.

lookstraightahead

I'm. It sure about Scottish law but tying up her equity with yours could find you all in a sticky situation if she needs care (which she might despite your best efforts to look after her if she's poorly ) 

Pixie5740

kirsteen0603 said:

My mum is in her 70s and while healthy and active we are looking to move into her house and extend to accommodate us all. Plan is my mum to maintain a third ownership and us the other two thirds. Has anyone ever done this? And is there mortgage options to allow this ( mums third will be purely equity - and the 2/3 we buy will be cash for her retirement with a about 50% equity). I’m struggling to find the implications of this and mortgage options for us. We are in Scotland.

As edddy said, you can't get a mortgage to buy 2/3 of a property.  The mortgage would need to be secured against the whole property.  HSBC used to do mortgages where more people could be legal owners than were legally responsible for repaying the mortgage but I'm not sure if that is a product still offered.

If you can get a mortgage then a solicitor would be able to set you up as common owners or joint owners to reflect the ownership split.  You'd need to think about things such as survivorship clauses, who and how will pay for maintenance and repairs, etc.

Buying 2/3 of the property might not be the best option for the 3 of you.  It depends what you are ultimately trying to achieve.  Does your mother need the money?  Has she considered selling and moving to a different property?  My friend has a cracking townhouse and has decided that now the boomerang kids have finally left home for good a house with 4 floors will eventually get too much for her (in her 60s) although she manages fine now so she looking at alternatives such as main door tenement flats or new(er) builds with lifts.

Pixie5740

lookstraightahead said:

I'm. It sure about Scottish law but tying up her equity with yours could find you all in a sticky situation if she needs care (which she might despite your best efforts to look after her if she's poorly ) 

In Scotland, the council will provide a flat rate payment for the personal and nursing care part of care home fees.  You then need to contribute towards your accommodation and living costs in the care home the residential part of your care home fees.

If it ever comes to the OP's mother needing to move into a care home then the property can be disregarded if the OP is over 60 at that time but savings the mother has in the bank from selling 2/3 of the property can be used, or any other savings she might have.  I think the lower threshold for savings is £18k.

deannagone

Also, what happens to your mother if you divorce and hubby/partner wants to be off the mortgage?  Things like this need to be talked about, even if right now it seems like it will never happen.