Moving my family to my Father's property - unsure of our options

egadsby

My father is 80 and is living alone in his property since my mother passed away last year. It is our intention that my wife, children and I move to the property to be with him and in that respect it has been discussed and everyone is on board.

There is a 60K mortgage still outstanding on the property, 30K repayment and 30K interest only. In an ideal world, my father would gift me the property and I would pay off the remaining mortgage which I can easily afford.

When we discussed my being put on the mortgage, his bank said that a new mortgage could only be for one year due to my father's age - fair enough, I understand that.

I don't know what our options are now. There is a relatively low balance left on the mortgage, but it seems as though a technicality might get in the way of us paying it off.

There is somehow 10 years on the current mortgage, so we could just move there and continue as it is. Could we overpay this mortgage potentially to get it paid off within this 10 year period? I am also concerned about what would happen if my father passed away, we were living there and the mortgage is in his name only - would the bank want the property sold even if we were living there?

I am only concerned about the legal/financial side of things - no need to question the dynamics of living together as a family.

Thanks to anyone who can advise or provide more info.

MovingForwards

Look at buying all the property, at current market value, clear the old mortgages and your dad receives the remaining money.
Saves some of the problems covered in this thread 
https://forums.moneysavingexpert.com/discussion/6176526/buying-house-with-parents/p1

Provided you can get a mortgage when the lender knows your dad will still be living in the property.

Again, it's one for a broker.

dimbo61

Well your Dad could live another 10/15/20 years so if you do move in with him why not overpay both parts of the mortgage each month.
Check with the lender if you can overpay  both parts of the mortgage.
Maybe overpay the part with the most expensive interest rate.

egadsby

MovingForwards said:

Look at buying all the property, at current market value, clear the old mortgages and your dad receives the remaining money.
Saves some of the problems covered in this thread 
https://forums.moneysavingexpert.com/discussion/6176526/buying-house-with-parents/p1

Provided you can get a mortgage when the lender knows your dad will still be living in the property.

Again, it's one for a broker.

Thanks - it is one for a broker, you're correct.

When I spoke to one previously he suggested buying the house from my dad, with him gifting me the equity. The mortgage would only be for the remaining amount rather than for the full market value which I think is was you are suggesting? Seems a bit silly to get a 350k mortgage when there's only 60 left to pay. I will be the sole beneficiary in the will anyway - horrible to talk about it so bluntly but it's true. I am just trying to secure the property for us all (him included) as the 10 year mortgage he has will be 30k short of paying it off in its entirety.

The other possibility is that we leave the mortgage as it is and overpay to clear it.

Not concerned about tax implications or deprivation of assets at this point, if those are the problems you are referring to.

Thanks.

getmore4less

Think about it 

£60k mortgage 10 years. 

If between you that can be paid off then just stick with it and get the best retention deals.

You can structure the deal between you to make it work.

If you are going to move in then you could buy 1/2 and create a debt to be repaid over time.

That avoids some tax issues and deprivation but needs to be done without the lender if they won't support it.

As a sole beneficiary just loan enough to pay the debt( it reduces the estate ) is another simple option.

Wi the parents estate have an IHT issue?

MovingForwards

Buying all of the property, at full market value, your dad receiving everything over the outstanding mortgage means no issues with deprivation of assets and funding a home / carers if required. What isn't spent in his lifetime comes back to you.

Paying off the remaining mortgage only, and being gifted the remaining, is deprivation of assets if he requires care / a home / top up pension benefits; he'll receive no help as he's deemed to have the money.

If you pay the current mortgage you'll have to sell and move or buy the property at the then market price, if he needs a care home, unless you have the money to pay it.

If you pay the current mortgage and he dies before the 10 years are up, you'll have to get a mortgage to pay it off, unless you have the cash.

Just putting the optioi in quick, simple terms to give you a starting point with research and consideration as to what to do.

egadsby

getmore4less said:

Think about it 

£60k mortgage 10 years. 

If between you that can be paid off then just stick with it and get the best retention deals.

You can structure the deal between you to make it work.

If you are going to move in then you could buy 1/2 and create a debt to be repaid over time.

That avoids some tax issues and deprivation but needs to be done without the lender if they won't support it.

As a sole beneficiary just loan enough to pay the debt( it reduces the estate ) is another simple option.

Wi the parents estate have an IHT issue?

Yes, I am starting to think that we will move there (we are definitely going to do this) and then work out a way to overpay the mortgage. It's annoying about the deprivation of assets part, but if my father owned the property outright, we would still move there and face the same issue, i.e. the property being used to pay for care if needed. Could a charge go on the house if we continued to live there, or would it need to be sold?

I see what is being said by MovingForwards that buying the whole property at full market rate avoids this, but we won't be able to get a mortgage for that amount as we have no cash saved up at the moment.

But I am interested in the idea of buying half - how does that avoid the deprivation issue? The house couldn't be sold to pay for care because half of it is owned or mortgaged by us? We could borrow from a bank to do this if they accepted the situation of my father living there presumably?

Please can you explain what you mean by 'just loan enough to pay the debt (it reduces the estate)' - thanks.

Sorry if the answers to these questions are obvious, but it would really help to understand all of our options.

getmore4less

Deprivation is if he gifts you  if you buy 1/2 as you are sharing the property there is no deprivation

Finding a lender may be a problem as AIUI from the broker here lenders have stopped doing sole borrower joint proprietor mortgage.

Your dad could be the lender where you have a debt to him for 1/2 the property.

You agree a payment plan and that payment dad can use to overpay his mortgage on his 1/2.

How long do you think it would take to clear the £60k if you all put in what you could.

Formalizing the arrangement(changing land reg) while there is a still outstanding mortgage may be an issue.

you could do it in 2 parts 

you pay off as much of the mortgage as possible creating a debt(dad->you)
once the mortgage is gone you buy 1/2  with a credit for the debt leaving a debt you->dad.

You then pay your dad for the rest on a payment plan over whatever term you like as the debt disappears(you will inherit so net zero) when he passes.

If care is required then there is an income stream from the debt repayments.

While his estate(1/2 the house, remaining debt and other assets) remains below IHT it not a problem.

Selling 1/2 the house could give a steady pot of spending money.


Can we clarify one thing.
My father is 80 and is living alone in his property since my mother passed away last year.

Did they own jointly(joint or TIC) did her share go to dad or was there a life interest(fairly common to ring fence from care).

There is the option of DOV to do a life interest but that can still be seen as a deprivation.

egadsby

getmore4less said:

Deprivation is if he gifts you  if you buy 1/2 as you are sharing the property there is no deprivation

Finding a lender may be a problem as AIUI from the broker here lenders have stopped doing sole borrower joint proprietor mortgage.

Your dad could be the lender where you have a debt to him for 1/2 the property.

You agree a payment plan and that payment dad can use to overpay his mortgage on his 1/2.

How long do you think it would take to clear the £60k if you all put in what you could.

Formalizing the arrangement(changing land reg) while there is a still outstanding mortgage may be an issue.

you could do it in 2 parts 

you pay off as much of the mortgage as possible creating a debt(dad->you)
once the mortgage is gone you buy 1/2  with a credit for the debt leaving a debt you->dad.

You then pay your dad for the rest on a payment plan over whatever term you like as the debt disappears(you will inherit so net zero) when he passes.

If care is required then there is an income stream from the debt repayments.

While his estate(1/2 the house, remaining debt and other assets) remains below IHT it not a problem.

Selling 1/2 the house could give a steady pot of spending money.


Can we clarify one thing.
My father is 80 and is living alone in his property since my mother passed away last year.

Did they own jointly(joint or TIC) did her share go to dad or was there a life interest(fairly common to ring fence from care).

There is the option of DOV to do a life interest but that can still be seen as a deprivation.

Thanks for this.