Inheritance dilemma

sheramber

If she  can't afford to pay a ten year mortgage how many years does she intend to take to repay you?

FarmGirl78

If she's mid-forties she'll be allowed a mortgage up to the age of 68 (current retirement age). If she can prove she's paying into a pension, either works or private one, then she'll be able to get a mortgage up to age of 75 or even older.

80k on a 30 year mortgage should be easily doable for her. Even if you'd trust her with your life, this is the easiest simplest way of getting the closure you talk about. It would be securing everyone involved against any bad feeling or falling out if unexpected circumstances arrive in future.

Jude57

I agree with those who have suggested formalising the arrangement. In effect, you become the lender of a private mortgage and a Charge is registered against the property setting out the terms. This has the effect of securing the debt your sister owes you and would perhaps give reassurance to your OH that you won't lose out. Any conveyancing solicitor should be able to advise and draw up a private mortgage agreement. Your sister should of course have her own solicitor to advise and explain the terms to her, to ensure her interests are protected and that she understands the consequences of not making the required payments.

A private mortgage and accompanying Charge protects your financial interest in the property but doesn't render you liable for maintenance costs etc, so your OH should be content that the house won't become a drain on your finances. It also protects you in the event your sister dies intestate or makes a Will leaving everything to the donkey sanctuary before the debt is paid in full - you would get your money first, before any bequests. It would protect your interest if your sister, as young as she is, became ill to the point she needs full time residential care and the house needs to be sold to fund that - again, you would get your money first.

The terms of a private mortgage are entirely up to you and your sister to agree. You can decide to charge interest or not, have monthly, weekly, quarterly, annual payments, whatever suits you both. I'd agree with other posters that if you don't charge at least simple interest, you're effectively depriving yourself of the benefit your sister will have of an appreciating asset. I'd also recommend that, if you proceed with a private mortgage you also register with the Land Registry for property alerts. This means that if anyone tries to mortgage or sell the house, you are notified and can intervene if necessary.

There's a lot of information about private mortgages online but I really do recommend speaking to a solicitor to fully understand how they work.

Hopefully, having such safeguards in place will reassure your OH and satisfy your sister's aversion to traditional mortgages.

Sea_Shell

Could a private mortgage also be done as a percentage of the property, based on an agreed value v. shortfall, rather than for the shortfall in ££s .  With maybe a floor in place?

You could then benefit from any increase in price, but still be guaranteed the initial amount if prices fall. 

Sea_Shell

Hopefully the OP is still reading and taking something useful from this thread, as they haven't been back in a few days.

Mojisola

Sea_Shell said:

Could a private mortgage also be done as a percentage of the property, based on an agreed value v. shortfall, rather than for the shortfall in ££s .  With maybe a floor in place?

You could then benefit from any increase in price, but still be guaranteed the initial amount if prices fall. 

Get advice before doing this.  We were planning to lend some money to a relative to buy a house using this idea but were told by a couple of solicitors that it would make us beneficial owners (even though we weren't going to be on the deeds) and therefore second home owners and consequently liable for stamp duty.

Sea_Shell

Mojisola said:

Sea_Shell said:

Could a private mortgage also be done as a percentage of the property, based on an agreed value v. shortfall, rather than for the shortfall in ££s .  With maybe a floor in place?

You could then benefit from any increase in price, but still be guaranteed the initial amount if prices fall. 

Get advice before doing this.  We were planning to lend some money to a relative to buy a house using this idea but were told by a couple of solicitors that it would make us beneficial owners (even though we weren't going to be on the deeds) and therefore second home owners and consequently liable for stamp duty.

Interesting, thanks.     

It was just an idea....maybe not a very good one 

TripleH

The issue is that should your sister have financial trouble and loose the house, you may well loose your share.

I would get a formal agreement in place secured on the property (with a first charge) to protect your remaining share at your sister's expense as she wants to keep the property.

Alternatively as suggested earlier, if you have children, think of the property as to help them. You secure a 50% charge on the property and keep a pool of money from the joint inheritance to maintain the property (so not using your own money).

caprikid1

One thing to consider is has the sister who has been resident all this time effectively been looking after her mother and avoiding her mother going into care ?

It might be worth considering coming to an agreement that see's this long term car / expense avoidance recognised. £80K does not go far in a good care home.

RobertF82

Everything related to the inheritance is just between you and your sister.

Your other half can have an opinion but it's up to you and you only to agree to a deal with your sister about the money/house.

So you may need to put your OH in their place.