Buying a house with Mum

NoAngel

My Mum is 69 and wanting to sell her house. The plan is for my husband and I to also sell ours and for us all to buy a bigger house to live together (along with our children).
My Mum’s portion of the house would be purchased with cash from her house sale. DH and I have a mortgage on our house and may need some additional borrowing depending on the price of the bigger property.
my question is whether this is actually even possible to do? Would a mortgage lender consider lending us the money for our 2/3 of the house when my Mums name wouldn’t be on the mortgage (because she doesn’t need one and because she wouldn’t be able to get one given her age).

propertyrental

No.

If all 3 of you are going to own the property, then you'll need a joint mortgage with all 3 names.

If only 2 of you own, and both get a joint mortgage, mum would have to

a) be a permitted occupier and

b) any money she put towards the property would have to be either a gift or a loan to you

Mortgage lenders probably won't like either option in b) above.

But I suggest you go speak to a mortgage broker.

Jemma01

What is the mum getting? You didn't mention if she'll own part of the house? You'll likely be accused of asset deprivation if you take her money and give her nothing (other than the privilege of living in your house). She's at an age where she might need care, and if she needs to be admitted to a care facility because she started experiencing dementia or something else that you can't care for, how would she pay for the care?

She needs her own lawyer to protect her interests.

NoAngel

Jemma01 said:

What is the mum getting? You didn't mention if she'll own part of the house? You'll likely be accused of asset deprivation if you take her money and give her nothing (other than the privilege of living in your house). She's at an age where she might need care, and if she needs to be admitted to a care facility because she started experiencing dementia or something else that you can't care for, how would she pay for the care?

She needs her own lawyer to protect her interests.

It would depend on how much the bigger house costs, but for argument sake, let’s say it’s £600k, she will put in £200k cash and DH and I would purchase the other £400k (£120k with equity from current house and the rest with mortgage). She would therefore own 1/3 of the house. We have no plans to take her money from her. The point of living together would be so that we can provide care should the need arise in the future. She wants to live closer to us but we thought that actually living together would be a better option.

Flugelhorn

I think that many people find that living very nearby is a better option - you can help out but keep all the finances separate and also have some independence.

Ultimately you can't be sure what sort of care she may need, it may be well beyond what you can manage and if you can manage for a few days or weeks you won't manage 24/7 for years. 

NoAngel

Flugelhorn said:

I think that many people find that living very nearby is a better option - you can help out but keep all the finances separate and also have some independence.

Ultimately you can't be sure what sort of care she may need, it may be well beyond what you can manage and if you can manage for a few days or weeks you won't manage 24/7 for years. 

Thank you. We have given those points lots of thought.

We’ve decided this is what we’d like to do but just need to know whether it’s possible given the fact that we require a mortgage but she doesn’t.

Emmia

What happens if she needs paid for care like a nursing home? The capital she'll realise through selling her home will then be tied up.in the house you live in, so she won't be able to access it, and the local authority would probably consider it a deprivation of assets

If they were separate properties.(even next door to each other) there would be less of an issue as her home could be sold without affecting you.

km1500

there are two ways to do this 

the first way is that your mother gives you the proceeds of her house as a gift and you buy the new house in you and your partner's name. you would have to declare the gift from your mother to the mortgage company  but you should have no problem in principal getting a mortgage 

the second way is that your mother owns a third of the house at the land registry. you were therefore be tenants in common and would have to find a mortgage lender who was willing to lend on your share of the house.

there are inheritance tax implications and also complications if you need means a tested benefits such as care from the local authority but you didn't ask that question

RHemmings

I note the mention of deprivation of assets by @Jemma01 above. Clarification by the OP indicates that the OP's mum will not lose any personal assets, except that OP's mum's assets will be changed to be one third of a more expensive property instead of all of a cheaper property. 

In terms of paying for care costs in the future, I believe that a house where the person needing care resides but where there are other relatives living cannot be forced to be sold to pay for care-home fees, and that the value of that home cannot be included in calculations for how much the person needing care should pay for that care. https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/ 

However, if a ‘qualifying relative’ also lives in the property or it is classed as their ‘main home’ even if they don’t live there all the time, then the value of the property cannot be included in the financial assessment and it cannot be sold to pay for care home fees.

The article then goes on to say that the situation is more complicated than that, based on complicated rules of 'property disregard'.

Lloyds Bank describes joint mortgages, which it says are typically between two people, but can be three or four, particularly when these people are related. Which they all will be in the OP's case. https://www.lloydsbank.com/mortgages/help-and-guidance/mortgage-types/joint-mortgages.html  It says that in the case of a joint mortgage with more than two people, only the incomes of the two highest earning people on the mortgage will be used when deciding how much can be borrowed. Which seems suitable in the OP's case, as OP's mum doesn't need to borrow in order to provide her share of the purchase price. 

Given that the OP wants to be able to provide care for OP's mum, it seems clear to me that there is no intention to avoid care fees here. But, I'm wondering whether this is incidentally - for other people - a method of avoiding having to sell a house to avoid paying care home fees. I.e. the strategy is: parent sells up and moves in together with progeny in a mutually owned house. Then, if at some point in the future care is needed, the house can't be included in calculations. I have no idea if this could be considered deprivation of assets, as the assets are moved but not lost by the OP's mum. So, this is not the case of giving away property or money, that is the stereotypical 'deprivation of assets' case. 

Here: https://www.ms-solicitors.co.uk/community-care-law/deprivation-of-assets/faqs-social-care-funding-deprivation-of-assets/#3   there is discussion of deprivation of assets, which includes the following example (my emphasis - fits the OP's case perhaps)

You and your wife combined your assets with your disabled father’s assets to buy a house that you could all live in together, to care for him. The new house had to be put in you and your wife’s name to get a mortgage. The Council have said that your father has ‘deprived himself’ of the value of his old property and that he must pay for his care fees. He pays £500 per week for agency carers to visit him while you are at work and cannot afford these fees alone. How can you get the Council to overturn a deliberate deprivation of assets decision?

This doesn't seem consistent with the possibility of a joint mortgage. But, it suggests that the risk raised by @Jemma01 would need to be taken seriously if a full joint mortgage cannot be obtained. And possibly if it can. 

OP - is it possible for you to get a mortgage agreement in principle for a joint mortgage with all three of you. I haven't had many AIPs, but I don't remember them costing me anything. As a more complex than standard case, it may be necessary to go through a mortgage broker which may cost. But, it would give an answer. 

Note: I'm not arguing one way or the other here. I'm just thinking that these points need to be considered - and actual answers found at some time. 

bobster2

RHemmings said:

I note the mention of deprivation of assets by @Jemma01 above. Clarification by the OP indicates that the OP's mum will not lose any personal assets, except that OP's mum's assets will be changed to be one third of a more expensive property instead of all of a cheaper property. 

In terms of paying for care costs in the future, I believe that a house where the person needing care resides but where there are other relatives living cannot be forced to be sold to pay for care-home fees, and that the value of that home cannot be included in calculations for how much the person needing care should pay for that care. https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/ 

However, if a ‘qualifying relative’ also lives in the property or it is classed as their ‘main home’ even if they don’t live there all the time, then the value of the property cannot be included in the financial assessment and it cannot be sold to pay for care home fees.

Not all relatives are "qualifying relatives". Adult children under 60 who are not disabled would not count as "qualifying relatives" - so the house could be included in a financial assessment for care fees... See page 7... https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs38_property_and_paying_for_residential_care_fcs.pdf

Browntoa

As above, "mandatory disregard" is mainly expected to be a surviving spouse or partner . The only exception would be a sufficiently disabled relative ( itself depending on evaluation by the local council) 

Sheltered accommodation nearby for her is a much better option and a cash gift used to assist your purchase if still needed or purely as a gift ( subject to the 7 year tax tapering) .