Buying home for family members to live in

Lily_01

Hi all,

I hope you are able to give me some advice.

I have recently purchased my own home which is a four hour drive away from my parents. I would like to purchase a property that my parents can stay when visiting and spend time with me and my family with the view that in the next two years when they retire, they could move there permanently. They would be staying as often as they can, most weekends etc. Unfortunately we don't have any space for them to stay with us during their visits.
The property would be purchased with a 50% deposit and remainder with a mortgage. My mortgage is relatively small and having used the online calculators available, I have an indication that I can afford a second mortgage. 

Has anybody been able to obtain a mortgage on a second home for family members to stay in? Any other options I can consider? 

Many thanks in advance. 

K_S

@lily_01 It's not uncommon to buy a second home for family to live in and there are plenty of products which can achieve your objectives.

As long as your income is sizeable enough to support affordability (as per lender calcs) for two mortgages, you should have options at 50% LTV.

canaldumidi

Speak to an independant mortgage broker. Ideally one specialising in 2nd home mortgages.

You do not want a standard residential mortgage (as it's not your main residence) nor a BTL mortgage (unless you plan to let the property to your parents and take on all the liabilities of being a landlord).

You will also need specialist insurance for the same reason.

On retirement, when this becomes your parents' main residence, will you be selling and/or gifting it to them? Will they have an existing property where they are now to sell?

SDLT_Geek

Lily_01 said:

Hi all,

I hope you are able to give me some advice.

I have recently purchased my own home which is a four hour drive away from my parents. I would like to purchase a property that my parents can stay when visiting and spend time with me and my family with the view that in the next two years when they retire, they could move there permanently. They would be staying as often as they can, most weekends etc. Unfortunately we don't have any space for them to stay with us during their visits.
The property would be purchased with a 50% deposit and remainder with a mortgage. My mortgage is relatively small and having used the online calculators available, I have an indication that I can afford a second mortgage. 

Has anybody been able to obtain a mortgage on a second home for family members to stay in? Any other options I can consider? 

Many thanks in advance. 

If the property is in England you will need to budget for the extra 3% stamp duty land tax.

lisyloo

Presumably you are also aware and gains will be subject to CGT?

mobileron

What if you just buy a bigger house or something with a granny annexe

lookstraightahead

Are they "gifting" you any money to buy it? 

getmore4less

Every weekend with a 4hr drive each way, don't think that will last.

Depending on area hotel might be cheaper for a while and a lot less hassle.

Small mortgage, 50% deposit for a second home, begs the question.

Why not a slightly bigger house with a room they could stay in when visiting.


There are a few things to think about.
costs of buying,  inc extra 3% SDLT
mortgage/running costs  for a place only used part time

CGT, SDLT when the parent take over the place(if that is the plan)

Lily_01

Thanks all - some useful replies. 

The property will not be rented to them and no, they haven't gifted me any money for it. We have just bought our property so there are no plans for us to move in to a bigger one at this stage.  We have taken in to account SDLT, CGT and other costs.

It could be possible that my mother would stay for a couple of months at a time to be closer to grandchildren etc so will be used a lot more than just weekends away. 

The plan would be for them to sell their place and move in to the house permanently when they decide to do so. The whole selling process could take a while so I rather not wait until then to do that. Once they sell the property then an option could be that they buy the property off of me as they would then be able to afford to do so. 

rexmedorum

Lily_01 said:

...

The plan would be for them to sell their place and move in to the house permanently when they decide to do so. The whole selling process could take a while so I rather not wait until then to do that. Once they sell the property then an option could be that they buy the property off of me as they would then be able to afford to do so. 

That seems potentially a bit inefficient tax-wise: You'd get 3% extra stamp duty, possible capital gains tax when you sell it to han and potentially (depending on the value of their estate) inhertiance tax when they pass.

If they bought it instead you'd cut out any capital gains tax and if they do sell the other place and move permamently in 2 years they can reclain the extra stemp duty.