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  • FIRST POST
    • Cre
    • By Cre 15th May 18, 11:35 AM
    • 12Posts
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    Cre
    Buying a house with parents
    • #1
    • 15th May 18, 11:35 AM
    Buying a house with parents 15th May 18 at 11:35 AM
    Hi,

    My husband and I are selling our house. My parents are selling their house and we are looking to move in together.

    We would need a mortgage that amounts to 30% of the total new house value. But my parents are mortgage free and we would like them not to be added to the mortgage.

    My parents would be happy just to give us the money but I would like their position to be protected.

    They would be happy not to be on the title if this is best but equally wouldn't mind being on it if this is a better position.

    We know about joint ownership but fear this may cause issue with the mortgage? So thought a deed of trust may be the best way forward. However would this be counted to increase the inheritance tax threshold in the future (current estate below normal threshold but looking to the unknown in the future)

    Mortgage company won't advise at this stage they just want to know what we are doing when we've figured it out. Solicitor won't give us specific advice on what is best to do and don't know who else to ask!

    Any advice on what to do or even on who to ask would be greatly appriciated!!!
Page 1
    • LandyAndy
    • By LandyAndy 15th May 18, 11:44 AM
    • 24,415 Posts
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    LandyAndy
    • #2
    • 15th May 18, 11:44 AM
    • #2
    • 15th May 18, 11:44 AM
    No mortgage company is going to accept owners who are not a party to the mortgage.
    • Cre
    • By Cre 15th May 18, 11:47 AM
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    Cre
    • #3
    • 15th May 18, 11:47 AM
    • #3
    • 15th May 18, 11:47 AM
    That's what I thought so not being on the title but having a deed of trust may be the only way forward?
    • LandyAndy
    • By LandyAndy 15th May 18, 11:47 AM
    • 24,415 Posts
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    LandyAndy
    • #4
    • 15th May 18, 11:47 AM
    • #4
    • 15th May 18, 11:47 AM
    How old are you all?

    It won't affect the legal position but the decision as to whether it is a good idea to live together may be very different if the couples are 60s and 80s or 30s and 50s, say.
    • Cre
    • By Cre 15th May 18, 11:48 AM
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    Cre
    • #5
    • 15th May 18, 11:48 AM
    • #5
    • 15th May 18, 11:48 AM
    Deed of trust would be out of equity not out of mortgaged portion
    • Cre
    • By Cre 15th May 18, 11:50 AM
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    Cre
    • #6
    • 15th May 18, 11:50 AM
    • #6
    • 15th May 18, 11:50 AM
    Husband and I are late 30s parents early 70s
    • xylophone
    • By xylophone 15th May 18, 12:11 PM
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    xylophone
    • #7
    • 15th May 18, 12:11 PM
    • #7
    • 15th May 18, 12:11 PM
    Might it be easier all round for your parents to buy outright a property suitable for their needs and for you to move close by?

    One couple I know bought a house next door to their elderly parents.

    Anther elderly couple of my acquaintance bought a ground floor flat within a few minutes walk of their son and wife's property.
    • glentoran99
    • By glentoran99 15th May 18, 12:14 PM
    • 5,476 Posts
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    glentoran99
    • #8
    • 15th May 18, 12:14 PM
    • #8
    • 15th May 18, 12:14 PM
    No mortgage company is going to accept owners who are not a party to the mortgage.
    Originally posted by LandyAndy
    Surely they do all the time in co-ownership arrangements, which is essentially what this would be
    • Cre
    • By Cre 15th May 18, 12:17 PM
    • 12 Posts
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    Cre
    • #9
    • 15th May 18, 12:17 PM
    • #9
    • 15th May 18, 12:17 PM
    This is not a practicable or financially viable option really. Parents are looking to live on the ground floor so woukd be looking at a bungalow which are hugely expensive in the area we are looking to go.

    We are happy with the property we are buying and it suits us all for various reasons both bow and in the future. We are just keen to do everything by the book and not get ourselves into trouble down the line.
    • Cre
    • By Cre 15th May 18, 12:33 PM
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    Cre
    It's almost like the system wants us to unintentionally fall foul of inheritance tax rules in the future...
    • davidmcn
    • By davidmcn 15th May 18, 12:49 PM
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    davidmcn
    Surely they do all the time in co-ownership arrangements, which is essentially what this would be
    Originally posted by glentoran99
    Not sure what sort of set-up you're referring to as "co-ownership arrangements" (shared ownership?), but normal residential mortgages are aimed at borrowers who are one and the same as the owners. Legally other things are possible, but there are regulatory headaches e.g. in this example, the parents arguing that they weren't aware "their" property would be at risk because of the OP's defaults on their loan.
    Last edited by davidmcn; 15-05-2018 at 12:52 PM.
    • gingercordial
    • By gingercordial 15th May 18, 12:51 PM
    • 1,221 Posts
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    gingercordial
    Are they generally in good health?

    If they give you the money and take no ownership of the house there could be two financial issues:

    - Inheritance tax - as they will continue to live in the property it may be a gift with reservation of benefit and so won't fall out of tax after seven years.

    - Deprivation of assets if one of them needs state-funded care, but I believe for this to apply they would have to have given away the asset in order to avoid care costs so if they are in good health now with no particular health reasons which make care an imminent expectation that may be OK.

    However they should also bear in mind their security, because essentially they won't have any. Say you and your husband divorce. The house, jointly owned by the two of you, will be a marital asset and may need to be sold so that you can each afford a smaller property. What happens to your parents then? I think your post means they are your parents (not your in-laws) and whilst they may get on with your husband now, if you have an acrimonious divorce and he needs funds to buy a new place he may not be sympathetic to their needs (or indeed may not be able to afford to be sympathetic).

    Similarly you might die suddenly, in which case in the absence of a will stating otherwise the property will pass to your husband. He may be happy to keep living with his in-laws for a while. But say he meets someone else and wants them to move in. Does that work, if your parents have no ownership stake to prevent this? Or he wants to sell up to move in with his new partner. Or eventually he remarries and then also dies and new wife inherits the property, and she doesn't want to keep living with her late husband's former wife's parents... In all of these situations your parents could be turfed out with no assets at all, when they could potentially still live another 20-30 years.

    It is a dangerous route for them to take to have no stake in the property.
    • Cre
    • By Cre 15th May 18, 1:06 PM
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    Cre
    There is no expectation of an imminent need for care so I think we are ok on that.

    Inheritance tax wise we are a good sum away from the joint threshold for there estate at the moment. But I do worry about how it will be viewed when we spend on home improvements etc or if house prices make another spectacular jump.

    If i have read right a deed of trust would reserve rights to a financial input and rights of occupation so neither my parents nor my husband could be kicked out without compensation..
    • Cakeguts
    • By Cakeguts 15th May 18, 2:50 PM
    • 4,857 Posts
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    Cakeguts
    If your parents are thinking that they need a bunglow and want to live on the groundfloor then that suggests that they are already considering mobility issues. With the rules on deprivation of assets if they need residential care in the future they will be expected to fund it with their equity in the house so unless you can pay the carehome fees of possibly a 1000 per week you will have to sell the house that you all live in so that they can use their equity for the fees. This is one of the reasons why this is a bad idea and it is better for them to have their own house nearby so that you don't lose yours if they need to pay for care.
    • glentoran99
    • By glentoran99 15th May 18, 3:02 PM
    • 5,476 Posts
    • 4,661 Thanks
    glentoran99
    Not sure what sort of set-up you're referring to as "co-ownership arrangements" (shared ownership?), but normal residential mortgages are aimed at borrowers who are one and the same as the owners. Legally other things are possible, but there are regulatory headaches e.g. in this example, the parents arguing that they weren't aware "their" property would be at risk because of the OP's defaults on their loan.
    Originally posted by davidmcn


    seems to be just an NI thing https://www.co-ownership.org/
    • Cre
    • By Cre 15th May 18, 4:29 PM
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    Cre
    That's not the case at all. There are no current mobility issues they are just thinking long term and don't want to have to move again when the time comes. As moving is pretty expensive and stressful.
    • Cre
    • By Cre 15th May 18, 4:36 PM
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    Cre
    Also hoping to put off the need for care way into the future by me and my sister being close by.

    At the moment we are looking to them to do the caring for our kids while husband and I work.
    • JaneyLouWho
    • By JaneyLouWho 15th May 18, 7:21 PM
    • 155 Posts
    • 179 Thanks
    JaneyLouWho
    We have just done this - me, husband and two kids, and my mum bought a place together. She put up all the deposit as a gift and we funded the rest with a mortgage. We are adapting part of the property so she has separate facilities but for now we are house sharing. What we ended up doing was getting a mortgage in my name only, so she feels more secure should husband and I divorce, and setting up water tight wills for each of us. She is independent and healthy so no worries about deprivation of assets, and we are well under the inheritance tax threshold so that wont be an issue, We did consider a Deed of Trust, and selected our mortgage based on which lender would allow this given the rules lenders have on gifted deposits and the giftee living in the property, but we opted not to in the end and have got good wills instead.
    I will say that most of the advice I got on here was - dont do it, family and money shouldnt mix, think of the care burden etc etc. However, it works for us and we have gone into it with eyes wide open, as it sounds like you are. Good luck with it all!
    • 00ec25
    • By 00ec25 15th May 18, 7:49 PM
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    00ec25
    What we ended up doing was getting a mortgage in my name only, so she feels more secure should husband and I divorce,
    Originally posted by JaneyLouWho
    then your mother does not understand the first thing about what happens when couples divorce. Just because its in your name offers no protection whatsoever.
    • Tiglet2
    • By Tiglet2 15th May 18, 8:59 PM
    • 217 Posts
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    Tiglet2
    I'm pleased that your parents have no mobility issues at the moment, but please be aware that things can change very quickly. My mum was completely independent until she had a fall at 77. From then on, she has had considerable mobility problems which is getting worse.
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