Mortgaging a property for elderly mother
Discussion
Mum has decided that she wants to move to a smaller house, closer to the rest of the family. We looked at one of the family moving into her house, but she wants her independence, her own house.
She is 80, in reasonable health, and no signs of dementia. She is still capable of doing day to day stuff, and still drives locally. Her house is out in the sticks, so getting anywhere without a car is tricky. She feels isolated, and that's getting her down.
Her house is worth about £360k, but they took out an equity release mortgage quite a few years ago. The balance on the mortgage now stands at just under £150k (6% fixed, repayment due when house is sold by the estate, or when moving into care).
She has enough savings to cover all the moving costs - agency and legal fees, stamp duty, removal costs, redecoration of the new property), so she will have about £210k to spend.
Unfortunately £210k doesn't buy a particularly nice property around here (West Cornwall). She has seen a nice place in my village that's on the market for £265k.
She wants to clear off the equity mortgage, so transferring it isn't an option. The rate being charged (6%) seems excessive, given current interest rates and a slow housing market.
I'm wondering if it would be feasible for me (or me and one of my siblings) to get a mortgage on the her new property, in return for a fixed percentage of the property when it is sold by the estate?
Worst case, I could get a mortgage on my house. I am currently mortgage free, house worth about £270k. Would this be a sensible idea? Would I even qualify for a mortgage at age 60, with a relatively low income? Part time job, 2x final salary pensions, self employment, total income about £20k pa. It would be a lot easier financially if I got a joint mortgage on the new property with one of my siblings.
How would me owning a share of mum's new house sit with the authorities if she did need to go into care at some point? No problems with inheritance tax, as the estate would be below the threshold, but would it be seen as trying to avoid paying for care in the future?
Any other ideas that don't involve the "punitive" interest rates of an equity release mortgage?
She is 80, in reasonable health, and no signs of dementia. She is still capable of doing day to day stuff, and still drives locally. Her house is out in the sticks, so getting anywhere without a car is tricky. She feels isolated, and that's getting her down.
Her house is worth about £360k, but they took out an equity release mortgage quite a few years ago. The balance on the mortgage now stands at just under £150k (6% fixed, repayment due when house is sold by the estate, or when moving into care).
She has enough savings to cover all the moving costs - agency and legal fees, stamp duty, removal costs, redecoration of the new property), so she will have about £210k to spend.
Unfortunately £210k doesn't buy a particularly nice property around here (West Cornwall). She has seen a nice place in my village that's on the market for £265k.
She wants to clear off the equity mortgage, so transferring it isn't an option. The rate being charged (6%) seems excessive, given current interest rates and a slow housing market.
I'm wondering if it would be feasible for me (or me and one of my siblings) to get a mortgage on the her new property, in return for a fixed percentage of the property when it is sold by the estate?
Worst case, I could get a mortgage on my house. I am currently mortgage free, house worth about £270k. Would this be a sensible idea? Would I even qualify for a mortgage at age 60, with a relatively low income? Part time job, 2x final salary pensions, self employment, total income about £20k pa. It would be a lot easier financially if I got a joint mortgage on the new property with one of my siblings.
How would me owning a share of mum's new house sit with the authorities if she did need to go into care at some point? No problems with inheritance tax, as the estate would be below the threshold, but would it be seen as trying to avoid paying for care in the future?
Any other ideas that don't involve the "punitive" interest rates of an equity release mortgage?
clockworks said:
It would be a lot easier financially if I got a joint mortgage on the new property with one of my siblings.
This would be your best option..............you could get a second residential mortgage for a "Dependent Other".........we've done this for a number of clients......kids going to university and parents want to buy a house for them to live in etc etc........don't forget the additional 3% stamp duty you'd incur......Good to know that it can be done. I guess it would be best to speak to a broker, rather than going straight to a bank?
Had another idea:
I can raise enough to cover my share by selling a couple of watches, and not paying off my car loan early.
My sister could raise her share by taking out a personal loan at 3.1%. A little more each month than a mortgage, but no up front fees, and the rate is fixed for the term of the loan.
Had another idea:
I can raise enough to cover my share by selling a couple of watches, and not paying off my car loan early.
My sister could raise her share by taking out a personal loan at 3.1%. A little more each month than a mortgage, but no up front fees, and the rate is fixed for the term of the loan.
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