Equity release calculation

bluebaron

I would like to but my uncles house. He is 75 in very good health (his father lived to 96), his house is worth approx £650k.
I can afford a lump sum now of £300k. what would be a fair offer for the remainder?

im thinking £1000 a month until death. Obviously who knows? It could be 1, could be 20 years. He will also benefit from the interest from £300k (£15k at 5%) 

anyone  know how to calculate a fair offer?

Caz3121

where is the uncle going to be living if you purchase his property?
would there be other beneficiaries when he passes away?

The_Unready

Have you actually asked your uncle if he wants to sell his house?

MWT

bluebaron said:

anyone  know how to calculate a fair offer?

Going to need a lot more context for this one...

Are you offering this to him as an alternative to Equity Release? If that is the case then he does presumably need the money?

Do you plan to move in with him after your first payment and what is your suggestion for the deeds? ... would you expect to be the sole owner?

There are going to be complications if your Uncle requires long-term care at some point in the future, and as per the comments above, if there are other family members that might have reasonably expected to benefit from his estate they may have objections to you getting the property at what may turn out to be a considerable discount...

bluebaron

Sorry to be clearer he will stay in the property until death. I’m planning on retiring there in 15+ years

He will use the money for his own purposes, holiday cars Gifting I guess. 

The reason for doing this now is I have some spare cash and if he wants to gift any we are hopeful we can escape the 7 year rule and also gives him a nice monthly income to supplement his pension. 

Bit vague for now as just floating the idea as might be better than waiting for his death and paying tax and have to buy the property from his estate. Also gives home money now and monthly moving forward.

easy

Honestly,  you need to get professional legal/benefits/tax advice on this. There are all sorts of possible problems to arise - 
Someone has already mentioned the issue of him needing care in the future -  if he still has an interest in the property,  the council could insist on it's sale to pay his care costs -  although I guess you could be the buyer  (assuming you could get a mortgage or whatever you would need),  it would be at the value at that date -  so could end up being a lot more money than you anticipate. 

Also think about what would happen if you had an accident/illness that cut your ability to pay his £1000  per month. So you end up owning half his house,  but no ability to pay the rest?  

Keep_pedalling

He would be far wiser to downsize than go with this crazy plan. 

bluebaron

Keep_pedalling said:

He would be far wiser to downsize than go with this crazy plan. 

The whole point his he has a small holding with some summer cabins that he rents, that I would like to take over in my retirement. 

MWT

bluebaron said:

Keep_pedalling said:

He would be far wiser to downsize than go with this crazy plan. 

The whole point his he has a small holding with some summer cabins that he rents, that I would like to take over in my retirement. 

What does he want though?

If his wishes are fully aligned with yours then you should both consult a lawyer (independent of each other) and he at least should consult a financial advisor, probably you too...

... and again, are there other family members who might also have an interest in the property?

user1977

bluebaron said:

Keep_pedalling said:

He would be far wiser to downsize than go with this crazy plan. 

The whole point his he has a small holding with some summer cabins that he rents, that I would like to take over in my retirement. 

Then sort it out with him whenever you retire.

bluebaron

user1977 said:

bluebaron said:

Keep_pedalling said:

He would be far wiser to downsize than go with this crazy plan. 

The whole point his he has a small holding with some summer cabins that he rents, that I would like to take over in my retirement. 

Then sort it out with him whenever you retire.

user1977 said:

bluebaron said:

Keep_pedalling said:

He would be far wiser to downsize than go with this crazy plan. 

The whole point his he has a small holding with some summer cabins that he rents, that I would like to take over in my retirement. 

Then sort it out with him whenever you retire.

If I wait until then he will be 90+ and there will be inheritance tax issues.