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  • FIRST POST
    • c0nn0r84
    • By c0nn0r84 15th Apr 19, 7:22 AM
    • 68Posts
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    c0nn0r84
    Helping mum
    • #1
    • 15th Apr 19, 7:22 AM
    Helping mum 15th Apr 19 at 7:22 AM
    Hi all,

    After a quick sense check of something me and my siblings have been discussing at the weekend.

    In a nutshell our mum lives alone in a house that has just been valued at 300k she isn't in the best of health and doesn't work. She is on an interest only mortgage that is up in 2 years and she owes the bank 150k. Owing to changes in her circumstances/health this is why she has been paying interest only so will soon be in a position where she has to sell the property.

    She isn't in the best of health and would sooner stay put but at present for her that isn't an option.

    My siblings and I have had a chat with mum about what she's going to do and we came up with the idea of us buying the property for her. The plan would be that we take a mortgage for the 150k (less deposit), buy the house and then mum lives there rent free for the rest of her (hopefully long) life. After that point, the house would be sold and the proceeds split between us after any outstanding mortgage is repaid.

    My question is whether it is permissible for a property owner to sell a property for a price well below it's present market value? On one side it would be cleaner for her to just sell it and buy somewhere else. She would sooner stay put if she can as the house has sentimental value, she knows the area and has been there her whole life. If she sells up then she would have to buy where she can afford which won't get her much round here. We looked at her living with one of us but that isn't possible either with young families.

    Any help gratefully received. I'm sure it's not as cut & dry as we think it is. One thought I had would that it might have to be a BTL mortgage which might mean we have no chance if we want to put a tenant in who basically lives there rent free.My siblings and I aren't sure this is possible but thought we'd try and find out for mums sake.
Page 1
    • Keep pedalling
    • By Keep pedalling 15th Apr 19, 8:03 AM
    • 6,285 Posts
    • 7,259 Thanks
    Keep pedalling
    • #2
    • 15th Apr 19, 8:03 AM
    • #2
    • 15th Apr 19, 8:03 AM
    Anyone can sell a house at whatever price they like, but in this case as you already suspect you are unlikely to find a mortgage provider who would lend under these circumstances.

    The big issue though would you mother’s loss of her current equity and the security it provides for her future. What would happen to her for instance of you or one of your siblings ran into financial difficulty through illness, unemployment or divorce all of which could force the sale of her house. One of you predeceasing her is a danger as well.

    Should she need residential care, then the LA would likely treat this as deliberate deprivation of assets, so would still treat her as though she had those assets in assessment for self funding.

    If there are no affordable places in her current location to downsize to then she might like to consider renting somewhere in the sheltered housing / assisted living sector.
    • Hutch100uk
    • By Hutch100uk 15th Apr 19, 8:08 AM
    • 455 Posts
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    Hutch100uk
    • #3
    • 15th Apr 19, 8:08 AM
    • #3
    • 15th Apr 19, 8:08 AM
    As previous poster said, if your Mum had to go into residential care there is a good chance her house would still be used to pay for it. The local council will look at her assets and if they see you have purchased her house, they would potentially still be able to use it
    My parents looked into transferring their house into mine and my sibling's names to prevent their house being used for care but we were advised by a solicitor that its not an option.
    • pinkshoes
    • By pinkshoes 15th Apr 19, 8:09 AM
    • 16,363 Posts
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    pinkshoes
    • #4
    • 15th Apr 19, 8:09 AM
    • #4
    • 15th Apr 19, 8:09 AM
    Could she not sell then buy something for 150k?

    Deprivation of assets would be your biggest issue. If your mum needed care then she cannot just give away 150k equity to you - this money would be needed to pay for her care,
    Should've = Should HAVE (not 'of')
    Would've = Would HAVE (not 'of')

    No, I am not perfect, but yes I do judge people on their use of basic English language. If you didn't know the above, then learn it! (If English is your second language, then you are forgiven!)
    • babyblade41
    • By babyblade41 15th Apr 19, 8:11 AM
    • 592 Posts
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    babyblade41
    • #5
    • 15th Apr 19, 8:11 AM
    • #5
    • 15th Apr 19, 8:11 AM
    I certainly don't understand the legal position, but just throwing this out there but why can't you all contribute to the current mortgage rather than buying it? .A solicitor could draw up some agreement to recover these payments on death

    You say she isn't in great health and there maybe a case for deprivation of assets especially buying at a very reduced rate if she needs care at some point.

    What I did for my Mum was build a self contained granny annexe with disabled features built in although she didn't need it at the time , the sale of your mothers house house could cover this cost and not hinder too much on family life .

    I think a few of us replied at the same time stating "deprivation of asset" problem
    • getmore4less
    • By getmore4less 15th Apr 19, 8:16 AM
    • 35,545 Posts
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    getmore4less
    • #6
    • 15th Apr 19, 8:16 AM
    • #6
    • 15th Apr 19, 8:16 AM
    I certainly don't understand the legal position, but just throwing this out there but why can't you all contribute to the current mortgage rather than buying it? .A solicitor could draw up some agreement to recover these payments on death ...
    Originally posted by babyblade41

    She is on an interest only mortgage that is up in 2 years and she owes the bank 150k.

    I suspect the OP does mean the full term and not just a temp fixed rate.

    Unlikely the lender will extend for ever but might be sympathetic to any plan that helps extend the time.

    The key I think is how suitable is the house now and in the near future.

    Reluctance to move often delays too long where moving is even harder or forced sale.
    • c0nn0r84
    • By c0nn0r84 15th Apr 19, 8:20 AM
    • 68 Posts
    • 16 Thanks
    c0nn0r84
    • #7
    • 15th Apr 19, 8:20 AM
    • #7
    • 15th Apr 19, 8:20 AM
    Thanks very much for the replies. Deprivation of assets was one of the other concerns I had and what happens if she needs to go into care because we wouldn't be in a position to pay for it. I'm of the mind personally that it's probably easier and for the best to sell the house and have 150k and then look at renting if buying for her isn't an option, but she is very attached to the house and the area.

    My worry is she digs her heels in, does nothing and the house ends up getting forcibly taken from her by the bank. We wouldn't be able to pay it off before the mortgage is due up hence why we are looking at whether we can buy it for her. presumably we could, then if she needs to go into care later on, we could sell it to pay for it?

    In short she wants the house more than she wants the money. She has existing income from pensions & other bits and bobs enough for her to cover her day to day life.
    • c0nn0r84
    • By c0nn0r84 15th Apr 19, 8:26 AM
    • 68 Posts
    • 16 Thanks
    c0nn0r84
    • #8
    • 15th Apr 19, 8:26 AM
    • #8
    • 15th Apr 19, 8:26 AM
    I suspect the OP does mean the full term and not just a temp fixed rate.

    Unlikely the lender will extend for ever but might be sympathetic to any plan that helps extend the time.

    The key I think is how suitable is the house now and in the near future.

    Reluctance to move often delays too long where moving is even harder or forced sale.
    Originally posted by getmore4less
    The house itself is in perfect order. It was basically totally refurbished about 10 years ago and should be good for her, in theory, for the rest of her life. It's big enough so that she could essentially live on the ground floor if mobility ever become a problem
    • AdrianC
    • By AdrianC 15th Apr 19, 8:45 AM
    • 21,907 Posts
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    AdrianC
    • #9
    • 15th Apr 19, 8:45 AM
    • #9
    • 15th Apr 19, 8:45 AM
    She currently owns a 300k property, on which she owes 150k. She has 150k in assets.

    The 150k borrowing needs paying back.

    Seems to me to make perfect sense to jointly own the property with her, buying a 50% share in it by paying off the mortgage.


    Her 150k remains in her name, and can be called on by the local authority if she requires care - no deprivation of assets.
    You need to find 150k.

    "Needing care" is not just about mobility. Who's willing to live there with her and become her 24/7 carer if she develops dementia, for instance?
    • MoneyGeoff
    • By MoneyGeoff 15th Apr 19, 8:45 AM
    • 175 Posts
    • 120 Thanks
    MoneyGeoff
    Has she looked into getting another interest only mortgage? RIO mortgages were legalised last year:

    https://www.which.co.uk/money/mortgages-and-property/mortgages/types-of-mortgage/retirement-interest-only-mortgages-explained-a9z9k0h9lbfy

    Note that this is not the same as an equity release mortgage. It's just an interest only mortgage for old people.
    • davidmcn
    • By davidmcn 15th Apr 19, 8:50 AM
    • 10,916 Posts
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    davidmcn
    My worry is she digs her heels in, does nothing and the house ends up getting forcibly taken from her by the bank.
    Originally posted by c0nn0r84
    While technically that's possible, in practice banks don't like risking the sort of publicity which comes from kicking little old ladies out onto the streets, especially if they're actually still able to service the debt.
    • Keep pedalling
    • By Keep pedalling 15th Apr 19, 9:02 AM
    • 6,285 Posts
    • 7,259 Thanks
    Keep pedalling
    Thanks very much for the replies. Deprivation of assets was one of the other concerns I had and what happens if she needs to go into care because we wouldn't be in a position to pay for it. I'm of the mind personally that it's probably easier and for the best to sell the house and have 150k and then look at renting if buying for her isn't an option, but she is very attached to the house and the area.

    My worry is she digs her heels in, does nothing and the house ends up getting forcibly taken from her by the bank. We wouldn't be able to pay it off before the mortgage is due up hence why we are looking at whether we can buy it for her. presumably we could, then if she needs to go into care later on, we could sell it to pay for it?

    In short she wants the house more than she wants the money. She has existing income from pensions & other bits and bobs enough for her to cover her day to day life.
    Originally posted by c0nn0r84
    Hopefully the fact that having her children take a whole pile of dept on is the only way should could stay put, will sway her to giving up her current home. I know too many people who have hung on to homes far to long. There are a couple of houses in my street where the occupants no longer have the money or energy to keep their homes in good order, so despite sitting on a fortune they are living like paupers.

    Does she have any friends who have already gone through this and downsized or moved into sheltered housing? If so they may be good people to talk to her about her options.
    • Keep pedalling
    • By Keep pedalling 15th Apr 19, 9:22 AM
    • 6,285 Posts
    • 7,259 Thanks
    Keep pedalling
    While technically that's possible, in practice banks don't like risking the sort of publicity which comes from kicking little old ladies out onto the streets, especially if they're actually still able to service the debt.
    Originally posted by davidmcn
    I would not rely on that, they are many people in her situation who had their homes forcible sold under these circumstances.
    • saajan_12
    • By saajan_12 15th Apr 19, 9:23 AM
    • 1,624 Posts
    • 1,252 Thanks
    saajan_12
    I think you need to try a few options, if the previous don't work:

    1) Mum extends mortgage as interest only in her own name, so hopefully the term outlasts her lifetime, with the mortgage being repaid through sale after her death. Does she have benefits / regular income to support the interest?

    2) You / siblings buy half property (in common or jointly with mum) and raise a mortgage for the 150k, with affordability based on your income. Speak to a broker if they can suggest a joint owner / single borrower mortgage.

    3) You / siblings buy whole property for 300k: mum loans you 150k deposit and you borrow 150k on mortgage. Mum's loan can be recorded as a second charge on the title after the mortgage lender. Then you haven't bought undervalue, mum still has the right to her 150k equity, just in the form of a debt. If / when she needs care, the property can be sold, and you repay her 150k from the proceeds, which can go towards her care.
    • c0nn0r84
    • By c0nn0r84 15th Apr 19, 10:10 AM
    • 68 Posts
    • 16 Thanks
    c0nn0r84
    She currently owns a 300k property, on which she owes 150k. She has 150k in assets.

    The 150k borrowing needs paying back.

    Seems to me to make perfect sense to jointly own the property with her, buying a 50% share in it by paying off the mortgage.


    Her 150k remains in her name, and can be called on by the local authority if she requires care - no deprivation of assets.
    You need to find 150k.

    "Needing care" is not just about mobility. Who's willing to live there with her and become her 24/7 carer if she develops dementia, for instance?
    Originally posted by AdrianC
    Yep, we've made it clear based on our own circumstances that if the worst happens (god forbid) we wouldn't be able to provide the level of care she may need which has to come first.

    I'm in the merchant navy and other 2 siblings are in the military so we are all away from home a large amount of time.
    • c0nn0r84
    • By c0nn0r84 15th Apr 19, 10:14 AM
    • 68 Posts
    • 16 Thanks
    c0nn0r84
    What would happen to her for instance of you or one of your siblings ran into financial difficulty through illness, unemployment or divorce all of which could force the sale of her house. One of you predeceasing her is a danger as well.

    Should she need residential care, then the LA would likely treat this as deliberate deprivation of assets, so would still treat her as though she had those assets in assessment for self funding.

    If there are no affordable places in her current location to downsize to then she might like to consider renting somewhere in the sheltered housing / assisted living sector.
    Originally posted by Keep pedalling
    The notional agreement we have discussed making is that if any of those things happened then we would have no option but to sell it and buy her something out of the proceeds wherever it may be. It's going to down that road if we don't interject anyway as the bank will want their money back when the mortgage runs out.

    Obvious additional problem comes with the idea of a divorce where other people may then have a claim on the asset.
    • dimbo61
    • By dimbo61 15th Apr 19, 12:42 PM
    • 10,232 Posts
    • 5,548 Thanks
    dimbo61
    Why not take Mum around a couple of council/housing association over 55,s flats or bungalows.
    Check on Google which housing associations have developments in your area
    Speak to CAB or local council.
    My Dad was struggling with the upkeep of his old home and decided to sell when he turned 70. Best decision he for his circumstances.
    Has a one bedroom apartment close to the trendy part of town.
    Daily walk to the shops and cafes nearby.
    No maintenance to worry about and spent most of the money he got from the sale on traveling the world to see family and enjoying 2/3/4 holidays a year.
    Huge garden to potter around and other people his age to socialize with.
    84 now and still happy in his apartment with No stairs and walk in shower with built in seat etc ( grab rails and warden on duty )
    • Cakeguts
    • By Cakeguts 15th Apr 19, 4:04 PM
    • 5,861 Posts
    • 9,154 Thanks
    Cakeguts
    The thing about retirement flats is that they are often cheaper than normal flats to buy so she should be able to afford a retirement flat with the equity that she has.


    Some parents won't take advice from their children. You don't want to be in the position that she blames you for any part of her future housing. So it might be a good idea to leave this until she has to do something.
    • Larac
    • By Larac 16th Apr 19, 9:56 AM
    • 862 Posts
    • 543 Thanks
    Larac
    The thing about retirement flats is that they are often cheaper than normal flats to buy so she should be able to afford a retirement flat with the equity that she has.


    Some parents won't take advice from their children. You don't want to be in the position that she blames you for any part of her future housing. So it might be a good idea to leave this until she has to do something.
    Originally posted by Cakeguts
    Totally agree with this - it usually is some 'life-changing' event which forces these moves. My late parents left it too late to move and downsize and the house was totally unsuitable to deal with the last 5 years of my Dad's life. As a family, we had suggested 'downsizing' many years earlier. On his death, my Mum moved into a retirement complex and she halved her bills and moved into a social community. We are now selling this flat to a couple where the husband long term health prognosis is not good. These retirement flats can be cheap - as long as you don't buy a new build!
    Last edited by Larac; 16-04-2019 at 10:01 AM.
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