Can my Mother pay off our outstanding ?
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zak3737
Posts: 4 Newbie
Hi all,
Grateful for any advice anyone can impart please......
I'm 55, and currently have a £76 Mortg, with about 9yrs left, unfortunately ! Started to OP by £100/mth.....
However, my Mum has discussed with me perhaps paying off the outstanding amount, so that we can start really planning & saving for the kids weddings and House purchases etc, rather than paying Banks interest ongoing !
She has £100k currently sat in Premium Bonds, which altho she gets regular £25-100/mth from, is largely unworking for her.
Its her only 'investment' as such, although she does have Rental Income of circa £26k/year from 2 Commercial properties, as well as a Private Pension of £800/mth, so she's fine for Income.
My Father passed away in 2015, and left those Commercial Properties, (£250/300k) and indeed his half of their Home, (Value circa £350/400k), in Trust for me, but as my mother as the beneficiary for the rest of her life. So, in effect, £500k Property is sat in Trust for me.
Of course, IF she did pay off the £76 Mortg for me, I've said I would happily pay her more per Month than she is currently getting from P.Bonds, so win win.
However, does anyone know specifically what the implications are financially for me or indeed her, if we go ahead ? Can the amount be deemed as an advance/loan on assets if it needed to be for any Tax situation ? If indeed there is any ?
Many thanks in anticipation.
Grateful for any advice anyone can impart please......
I'm 55, and currently have a £76 Mortg, with about 9yrs left, unfortunately ! Started to OP by £100/mth.....
However, my Mum has discussed with me perhaps paying off the outstanding amount, so that we can start really planning & saving for the kids weddings and House purchases etc, rather than paying Banks interest ongoing !
She has £100k currently sat in Premium Bonds, which altho she gets regular £25-100/mth from, is largely unworking for her.
Its her only 'investment' as such, although she does have Rental Income of circa £26k/year from 2 Commercial properties, as well as a Private Pension of £800/mth, so she's fine for Income.
My Father passed away in 2015, and left those Commercial Properties, (£250/300k) and indeed his half of their Home, (Value circa £350/400k), in Trust for me, but as my mother as the beneficiary for the rest of her life. So, in effect, £500k Property is sat in Trust for me.
Of course, IF she did pay off the £76 Mortg for me, I've said I would happily pay her more per Month than she is currently getting from P.Bonds, so win win.
However, does anyone know specifically what the implications are financially for me or indeed her, if we go ahead ? Can the amount be deemed as an advance/loan on assets if it needed to be for any Tax situation ? If indeed there is any ?
Many thanks in anticipation.
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Comments
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You could treat it as if it was a loan, what you pay is towards 'paying it off'.0
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We could, but what would the law or HMRC see it as ?!0
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She has £100k currently sat in Premium Bonds
HOW
The max holding is £50kpp.My Father passed away in 2015
If the other £50k were your fathers the holding of the deceased can only be held for 12 months from DOD.
Any prices after that will need to be repaid.0 -
.....
She has £100k currently sat in Premium Bonds
........
Commercial Properties, (£250/300k) and indeed his half of their Home, (Value circa £350/400k)
......
If everything went to mum then there is upto £1m nil rate band
there is £800k there and with property prices it will be worth keeping an eye on them and considering some IHT planning.
Since you will inherit and have a house etc. then you need multi generational IHT planning to avoid potentially big tax bills.....
Currently have a £76 Mortg, with about 9yrs left, unfortunately ! Started to OP by £100/mth.....
However, my Mum has discussed with me perhaps paying off the outstanding amount
.....
Of course, IF she did pay off the £76 Mortg for me, I've said I would happily pay her more per Month than she is currently getting from P.Bonds, so win win
.......
However, does anyone know specifically what the implications are financially for me or indeed her, if we go ahead ? Can the amount be deemed as an advance/loan on assets if it needed to be for any Tax situation ?
If she gifts it to you with no strings then it becomes a PET.
If she lives for 7 years it drops off her estate.
If she loans you the money and you pay it back(no interest) then there is no tax implications other than the debt remains part of her estate.
You could split part gift/part loan
£100pm for 20 years is £24k say that was the loan and the other £50k was a gift.
There is no gift tax and no tax on loans if no interest is paid.
if your LTV is decent then the interest rate should be very good the money may be better directed to making the grandkids deposits bigger as that will save a lot more money going forward if they are getting close to house buying.
The rates on mortgages get a lot better as the LTV drops I looked at nationwide a few days ago for another thread so as an exampleWith Nationwide(2y fix no fee rates),
95% 4.04%
90% 2.39%
85% 1.89%
80% 1.84%
75% 1.75%
70% 1.74%
65% 1.74%0 -
Thx Getmore.....
She has £50k PB in her name, and £50 in AN Others.......
Whats a PET pls ? Partially Exempt Transfer ?
If she does withdraw all in Bonds, AND pay off our Mortgage, she would indeed also give both Gkids £10k towards a House Deposit, she's talked about that too.
It would leave her some left over, as she has some other funds available too, as well as her income.
In theory, could any payment to our Mortgage be seen by HMRC as a Loan against Property currently held in Trust for me anyway ? To be paid back, when she decides to downsize, which I feel is approaching......0 -
Your mum needs to check the rules on premium bonds.
You can't use other people to hold bonds for you.0 -
Point taken, I'll remind her.
Whats a PET pls ? Partially Exempt Transfer ?
If she does withdraw all in Bonds, AND pay off our Mortgage, she would indeed also give both Gkids £10k towards a House Deposit, she's talked about that too.
It would leave her some left over, as she has some other funds available too, as well as her income.
In theory, could any payment to our Mortgage be seen by HMRC as a Loan against Property currently held in Trust for me anyway ? To be paid back, when she decides to downsize, which I feel is approaching......0 -
Point taken, I'll remind her.
Whats a PET pls ? Partially Exempt Transfer ?
yes
If she does withdraw all in Bonds, AND pay off our Mortgage, she would indeed also give both Gkids £10k towards a House Deposit, she's talked about that too.
It would leave her some left over, as she has some other funds available too, as well as her income.
one risk that comes up a lot is deprivation, with the assets and income probably not an issue to be too concerned about.
In theory, could any payment to our Mortgage be seen by HMRC as a Loan against Property currently held in Trust for me anyway ? To be paid back, when she decides to downsize, which I feel is approaching......
Not sure what you are getting at or trying to achieve.
She can gift you the money or loan you the money.
If this trust money is a life interest for her and she downsizes then gives it out I think that is a PET on her estate anyway so just delays the start of the 7 years.0 -
PET = Potentially Exempt Transfer for IHT purposes. As advised above, any gifts will then fall outside her estate for IHT purposes if she survives 7 years after the date of gift. If she dies sooner, than there is a sliding scale for how much will be exempt from the estate for IHT purposes.Original Mortgage (Feb '17) £269,995
Current Mortgage (End 11/19) £226,790
End Date November 2039 Original End Date February 20420 -
PET = Potentially Exempt Transfer for IHT purposes. As advised above, any gifts will then fall outside her estate for IHT purposes if she survives 7 years after the date of gift. If she dies sooner, than there is a sliding scale for how much will be exempt from the estate for IHT purposes.
ONLY if the gift is over the nil rate band so a minimum of £325k.0
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