Personal loan to Mum - can it be secured against her house?

TBagpuss

the alternative to charging interest would be to have the charge for a fixed % of the property value - this is very common in divorce cases,.

e.g. If the house was worth £200,000 and you were lending her £20,000, you would have a charge for a lump sum equal to 10% of the property value. 
If the property is worth £250,000 by the time it is sold, you would get £25,000 back, if property prices fall and it was only worth £180,000 you would get £18,000.

If you go for interest you may want to express is as something like 1% above BoE base rate, or 1% below the SVR of a specific lender, or something like that, so that if interest rates continue to rise you aren't losing money.

You and your mum should each get separate and independent legal advice, and one thing you should think carefully about it the circumstances in which you could demand repayment - for instance, this could on her no longer permanently living in the property (e.g. if she had to go into care)  or whether you want an option to give x months notice and her her repay (which might be appropriate if there's a possibility that you may need the funds yourself, even if that meant that she had to get a commercial mortgage. 

canaldumidi

though it can be a mathmatical nightmare working out what interest to charge on a % basis, daily, with rate changes, and also any changes to the outstanding loan. Banks have fancy computers to do it.....

CKhalvashi

canaldumidi said:

though it can be a mathmatical nightmare working out what interest to charge on a % basis, daily, with rate changes, and also any changes to the outstanding loan. Banks have fancy computers to do it.....

Not really. On a £100k loan at 1% interest (for simple numbers) you insert into a spreadsheet the amount outstanding and the interest rate, then divide the £1000 by 365 or 366 (for a daily rate) and multiply by the number of applicable days.

For a loan made today, that would be 325 days until 5 April (end of the tax year), or on that theoretical £1000 interest would be £890.41.

It doesn't need to be more complicated than you need to make it.

GDB2222

CKhalvashi said:

canaldumidi said:

though it can be a mathmatical nightmare working out what interest to charge on a % basis, daily, with rate changes, and also any changes to the outstanding loan. Banks have fancy computers to do it.....

Not really. On a £100k loan at 1% interest (for simple numbers) you insert into a spreadsheet the amount outstanding and the interest rate, then divide the £1000 by 365 or 366 (for a daily rate) and multiply by the number of applicable days.

For a loan made today, that would be 325 days until 5 April (end of the tax year), or on that theoretical £1000 interest would be £890.41.

It doesn't need to be more complicated than you need to make it.

It gets much more complicated if the interest rate keeps changing. It’s certainly not impossible to do on a spreadsheet, but it could take a while. 

Do not on any account let a solicitor make the calculations, as they are generally hopeless at that sort of thing.

Browntoa

It may not protect the secured amount if she needs care and the local council consider it "deprivation of assets" and the reason for the move in the first place

There is no time limit on this 

Mojisola

Browntoa said:

It may not protect the secured amount if she needs care and the local council consider it "deprivation of assets" and the reason for the move in the first place

There is no time limit on this 

How could a loan be considered deprivation?
Mum's financial statements will show that her savings were running out, the lump sum arriving in her account and the money being spent on ordinary living expenses.