Getting a mortgage with a deposit contribution from parents who *will* live in the property with me

Anticyclonic

Is there anybody here who has ever successfully obtained a mortgage under these conditions? I have been advised by several fee-free mortgage brokers online, and by Halifax over the phone, that it is an arrangement that can be accepted, but I am sceptical of how often it really has been accepted in practice, and thus am looking for anyone who can vouch for being an example.

For what it's worth, my parents and I are desperately hoping that I will be able to obtain a mortgage under these circumstances, because:

1. They're about to sell their home (unwillingly - they can't afford the repayments on their interest-only mortgage any more, and they can't re-mortgage due to their low income and their age - one of them is retired and on state pension, the other is six years away from state pension age and has only ever worked part-time) in which I currently live with them
2. When they sell it, they will release a sum of cash in the low six-figures (that's after paying off their mortgage)
3. Since they won't be able to get another mortgage and buy another home, the only "normal" option for them will be to rent, which would see them gradually burn away that cash on rent due to their low income (I'm not even sure how they would secure a private rental agreement with their income)
4. Me buying a house using their cash towards my deposit and then having them live with me is a dream solution, as it would mean I inherit the cash, they get a permanent home, and we all get to continue living together (and I get to continue living with their dogs)
5. I could not afford to buy a house large enough for the three of us, plus the two dogs, to live in without my parents contributing towards my mortgage deposit

So I, and they, have a huge amount riding on this possibility. They've currently got their property under offer, and I'm about to view properties myself this week, properties at prices that assume I will be able to get a mortgage using my parents' deposit contribution, but I'm extremely anxious because I will not know until I've made an offer on a property and submitted an application for a mortgage whether or not the arrangement I need is going to be accepted.

kingstreet

A couple of lenders will accept this. Any decent broker will know who they are.

Investigate the potential for "deprivation of assets" in the event of possible need for care provision.

Anticyclonic

kingstreet said:

A couple of lenders will accept this. Any decent broker will know who they are.

Investigate the potential for "deprivation of assets" in the event of possible need for care provision.

Thank you, it's nice to hear that said. Yes, the fee-free brokers have all mentioned Halifax (and that is who I spoke to directly on the phone), and one of them sent me an AIP from another major high street bank who they said would also accept the arrangement. That wasn't quite enough to put my mind at rest, hence me posting here!

I'm unfortunately aware of the position this arrangement would leave us in with regards to care funding in the future, and I'm also aware of a couple of other potential dangers: inheritance tax (which with the current threshold would not apply to us), and future insolvency of my parents.

Keep_pedalling

Anticyclonic said:

kingstreet said:

A couple of lenders will accept this. Any decent broker will know who they are.

Investigate the potential for "deprivation of assets" in the event of possible need for care provision.

Thank you, it's nice to hear that said. Yes, the fee-free brokers have all mentioned Halifax (and that is who I spoke to directly on the phone), and one of them sent me an AIP from another major high street bank who they said would also accept the arrangement. That wasn't quite enough to put my mind at rest, hence me posting here!

I'm unfortunately aware of the position this arrangement would leave us in with regards to care funding in the future, and I'm also aware of a couple of other potential dangers: inheritance tax (which with the current threshold would not apply to us), and future insolvency of my parents.

I am pretty sure that deprivation of assets is not an issue here as the reasons for this arrangement are clearly not to avoid care costs. Even if they could pay off the mortgage and stay where they are it would still be an issue while one of them remained in the property and the house is excluded. Living with you also lowers the chances that residential care will be require in the future.

One thing that would concern is there lack of security if anything happened to you. You don’t mention your marital status but if you are married, the impact of a divorce on your parents could be significant, as would you running into financial trouble and loosing the house as a result. 

You also need to protect them in case you pre decease them so a will and life insurance are a must. Critical illness insurance may also be worth while to protect your mortgage payments if accident or illness results in loss of income. 

Anticyclonic

Keep_pedalling said:

Anticyclonic said:

kingstreet said:

A couple of lenders will accept this. Any decent broker will know who they are.

Investigate the potential for "deprivation of assets" in the event of possible need for care provision.

Thank you, it's nice to hear that said. Yes, the fee-free brokers have all mentioned Halifax (and that is who I spoke to directly on the phone), and one of them sent me an AIP from another major high street bank who they said would also accept the arrangement. That wasn't quite enough to put my mind at rest, hence me posting here!

I'm unfortunately aware of the position this arrangement would leave us in with regards to care funding in the future, and I'm also aware of a couple of other potential dangers: inheritance tax (which with the current threshold would not apply to us), and future insolvency of my parents.

I am pretty sure that deprivation of assets is not an issue here as the reasons for this arrangement are clearly not to avoid care costs. Even if they could pay off the mortgage and stay where they are it would still be an issue while one of them remained in the property and the house is excluded. Living with you also lowers the chances that residential care will be require in the future.

One thing that would concern is there lack of security if anything happened to you. You don’t mention your marital status but if you are married, the impact of a divorce on your parents could be significant, as would you running into financial trouble and loosing the house as a result. 

You also need to protect them in case you pre decease them so a will and life insurance are a must. Critical illness insurance may also be worth while to protect your mortgage payments if accident or illness results in loss of income. 

If anything serious happened to me (i.e. incapacity or death), then my sibling (who moved out and married a few years ago, and now owns a home with her husband) would have to step in. We want to avoid this, because she is planning to start her own family - something I am never going to do myself - but if anything happened to me, then she would be left with no choice.

I'm single, and don't expect to ever marry (I'm in my mid-thirties now), though I suppose it is not impossible. I would certainly avoid legal marriage while my parents still lived in what would become a marital home.

Me getting into financial trouble in the future is absolutely a risk to my parents. But they have more than a risk, practically a certainty, of getting into serious trouble very soon if they do not take on the "risk of me" now. I will absolutely use a will and life insurance to protect them, and thank you for the suggestion of critical illness insurance, I did not know that existed.

kingstreet

Keep_pedalling said:

Anticyclonic said:

kingstreet said:

A couple of lenders will accept this. Any decent broker will know who they are.

Investigate the potential for "deprivation of assets" in the event of possible need for care provision.

Thank you, it's nice to hear that said. Yes, the fee-free brokers have all mentioned Halifax (and that is who I spoke to directly on the phone), and one of them sent me an AIP from another major high street bank who they said would also accept the arrangement. That wasn't quite enough to put my mind at rest, hence me posting here!

I'm unfortunately aware of the position this arrangement would leave us in with regards to care funding in the future, and I'm also aware of a couple of other potential dangers: inheritance tax (which with the current threshold would not apply to us), and future insolvency of my parents.

I am pretty sure that deprivation of assets is not an issue here as the reasons for this arrangement are clearly not to avoid care costs. Even if they could pay off the mortgage and stay where they are it would still be an issue while one of them remained in the property and the house is excluded. Living with you also lowers the chances that residential care will be require in the future.

One thing that would concern is there lack of security if anything happened to you. You don’t mention your marital status but if you are married, the impact of a divorce on your parents could be significant, as would you running into financial trouble and loosing the house as a result. 

You also need to protect them in case you pre decease them so a will and life insurance are a must. Critical illness insurance may also be worth while to protect your mortgage payments if accident or illness results in loss of income. 

I'm thinking about the residual equity following the sale. They are effectively giving it away. It's difficult to quantify "foreseeable need" as well.

Anticyclonic

kingstreet said:

Keep_pedalling said:

Anticyclonic said:

kingstreet said:

A couple of lenders will accept this. Any decent broker will know who they are.

Investigate the potential for "deprivation of assets" in the event of possible need for care provision.

Thank you, it's nice to hear that said. Yes, the fee-free brokers have all mentioned Halifax (and that is who I spoke to directly on the phone), and one of them sent me an AIP from another major high street bank who they said would also accept the arrangement. That wasn't quite enough to put my mind at rest, hence me posting here!

I'm unfortunately aware of the position this arrangement would leave us in with regards to care funding in the future, and I'm also aware of a couple of other potential dangers: inheritance tax (which with the current threshold would not apply to us), and future insolvency of my parents.

I am pretty sure that deprivation of assets is not an issue here as the reasons for this arrangement are clearly not to avoid care costs. Even if they could pay off the mortgage and stay where they are it would still be an issue while one of them remained in the property and the house is excluded. Living with you also lowers the chances that residential care will be require in the future.

One thing that would concern is there lack of security if anything happened to you. You don’t mention your marital status but if you are married, the impact of a divorce on your parents could be significant, as would you running into financial trouble and loosing the house as a result. 

You also need to protect them in case you pre decease them so a will and life insurance are a must. Critical illness insurance may also be worth while to protect your mortgage payments if accident or illness results in loss of income. 

I'm thinking about the residual equity following the sale. They are effectively giving it away. It's difficult to quantify "foreseeable need" as well.

Do you think there is a risk that those mortgage lenders who might otherwise accept this arrangement, will not do so on account of my parents' ages (61 and 66) due the possibility that they will develop care needs during the lifetime of the mortgage, and the house might need to be sold to release money to fund this?

MWT

kingstreet said:

I'm thinking about the residual equity following the sale. They are effectively giving it away. It's difficult to quantify "foreseeable need" as well.

... and there is also the difficult fact that if care is needed and the equity in the property cannot be released (obviously not possible for a t least the next 20 years given age of the OP) then the quality of care available is going to be limited.

Anticyclonic

I think I may have found some clarity for myself by considering the posts in this thread. It has occurred to me that the "deprivation of assets" issue applies to all parents gifting deposits to their children, not just to those who also intend to co-habit with them. I know that gifting deposits is common practice, and I'm sure I've not heard enough horror stories about local authorities later hunting down the children for that to be a widespread problem.

What sets my parents apart from the majority of those parents is that the amount of money they are trying to give me is so large. I believe they are doing this because they want us to live in a house that is as nice as the one that we have lived in together for the past 25 years. But it does not have to be. Although I will need some of their money to be able to afford a deposit on a property large enough for the three of us and the dogs, I will not need all of it. And the less of it I take, the less "deprivation of assets" is being caused. So perhaps the sensible thing for me to do is to convince my parents that in order to avoid painting a target on my back, we should accept that we will need to live in a more modest home than we have been used to.

kingstreet

MWT said:

kingstreet said:

I'm thinking about the residual equity following the sale. They are effectively giving it away. It's difficult to quantify "foreseeable need" as well.

... and there is also the difficult fact that if care is needed and the equity in the property cannot be released (obviously not possible for a t least the next 20 years given age of the OP) then the quality of care available is going to be limited.

Agreed. What you can get for the "A List" price around here in Staffordshire isn't great according to my Social Worker (Adult & Older People) spouse.

Anticyclonic

kingstreet said:

MWT said:

kingstreet said:

I'm thinking about the residual equity following the sale. They are effectively giving it away. It's difficult to quantify "foreseeable need" as well.

... and there is also the difficult fact that if care is needed and the equity in the property cannot be released (obviously not possible for a t least the next 20 years given age of the OP) then the quality of care available is going to be limited.

Agreed. What you can get for the "A List" price around here in Staffordshire isn't great according to my Social Worker (Adult & Older People) spouse.

What is the "A List" price?