Discussion
Hi Guys
I wasn't sure where to post this, as it is part a legal and part a financial situation I need advice on, from any of the formidable PH experts able to help in these area(s):
My father, 89, owns his own property, but there is an interest only fixed-term mortgage on there for £60k which expires in 2021. My father has cancer and we're worried about his prognosis over the next 2-3 years where he may need either home help (not currently necessary) or some form of residential care. My sister and I are trying to understand the following points:
- Ideally we'd like to neutralise the threat of the mortgage, term ending in 2021, without the need to sell my father's house, or have to stump up the repayment in full ourselves (in other words get an additional mortgage arrangement in both our names, one of our names, or our father, to replace what we currently have to maintain stability on the house) - is this possible?
- Can my father sell the house to one of us at a cheap price to help deal with any mortgage issues if we, or one of us, if we cannot get a mortgage on the property whilst my father is the owner?
- If my father needs to go into residential care, or needs home care, is there a way to help him qualify for council payment for this without him having to sell the property, or the money from it funding this?
I expect there are experts out there that advise on this very topic, as it must be quite a common scenario for many families with elderly parents needing care.
I should add that the property (a bungalow) is worth circa £300K.
Not doubt some people will question the 'morality' of looking out for any loopholes of ways of doing this, but if these exist, and can legitimately be used, I certainly don't have an issue doing so.
Any help/advice much appreciated.
Thanks
Blue One
I wasn't sure where to post this, as it is part a legal and part a financial situation I need advice on, from any of the formidable PH experts able to help in these area(s):
My father, 89, owns his own property, but there is an interest only fixed-term mortgage on there for £60k which expires in 2021. My father has cancer and we're worried about his prognosis over the next 2-3 years where he may need either home help (not currently necessary) or some form of residential care. My sister and I are trying to understand the following points:
- Ideally we'd like to neutralise the threat of the mortgage, term ending in 2021, without the need to sell my father's house, or have to stump up the repayment in full ourselves (in other words get an additional mortgage arrangement in both our names, one of our names, or our father, to replace what we currently have to maintain stability on the house) - is this possible?
- Can my father sell the house to one of us at a cheap price to help deal with any mortgage issues if we, or one of us, if we cannot get a mortgage on the property whilst my father is the owner?
- If my father needs to go into residential care, or needs home care, is there a way to help him qualify for council payment for this without him having to sell the property, or the money from it funding this?
I expect there are experts out there that advise on this very topic, as it must be quite a common scenario for many families with elderly parents needing care.
I should add that the property (a bungalow) is worth circa £300K.
Not doubt some people will question the 'morality' of looking out for any loopholes of ways of doing this, but if these exist, and can legitimately be used, I certainly don't have an issue doing so.
Any help/advice much appreciated.
Thanks
Blue One
Edited by Blue One on Saturday 14th December 13:39
Firstly, I am very sorry to hear about your father's condition and prognosis. I wish him, you and your family the best with this.
I find it quite amazing that the has an interest only mortgage at age 89. Are you certain this is the case?
There are certainly legal moves you can make to resolve what you are seeking to address. Your father will certainly not be able to get another mortgage at his age though.
Your father is able to sell his house at any price he likes, but everyone needs to ensure that in doing so no unwanted implications come into play (tax wise and care home fees wise).
I would speak to Sarnie (I'll give him the heads up if he has not seen your post here) and Nik (on the Intelligent Money sticky at the top of this forum) if you want to discuss things fully and privately.
There are plenty of others who could advise you here and they may offer their suggestions shortly.
All the best under the circumstances.
I find it quite amazing that the has an interest only mortgage at age 89. Are you certain this is the case?
There are certainly legal moves you can make to resolve what you are seeking to address. Your father will certainly not be able to get another mortgage at his age though.
Your father is able to sell his house at any price he likes, but everyone needs to ensure that in doing so no unwanted implications come into play (tax wise and care home fees wise).
I would speak to Sarnie (I'll give him the heads up if he has not seen your post here) and Nik (on the Intelligent Money sticky at the top of this forum) if you want to discuss things fully and privately.
There are plenty of others who could advise you here and they may offer their suggestions shortly.
All the best under the circumstances.
JulianPH said:
Firstly, I am very sorry to hear about your father's condition and prognosis. I wish him, you and your family the best with this.
I find it quite amazing that the has an interest only mortgage at age 89. Are you certain this is the case?
There are certainly legal moves you can make to resolve what you are seeking to address. Your father will certainly not be able to get another mortgage at his age though.
Your father is able to sell his house at any price he likes, but everyone needs to ensure that in doing so no unwanted implications come into play (tax wise and care home fees wise).
I would speak to Sarnie (I'll give him the heads up if he has not seen your post here) and Nik (on the Intelligent Money sticky at the top of this forum) if you want to discuss things fully and privately.
There are plenty of others who could advise you here and they may offer their suggestions shortly.
All the best under the circumstances.
Thanks Julian - yes, would be great to hear any thoughts from Sarnie and Nik...I find it quite amazing that the has an interest only mortgage at age 89. Are you certain this is the case?
There are certainly legal moves you can make to resolve what you are seeking to address. Your father will certainly not be able to get another mortgage at his age though.
Your father is able to sell his house at any price he likes, but everyone needs to ensure that in doing so no unwanted implications come into play (tax wise and care home fees wise).
I would speak to Sarnie (I'll give him the heads up if he has not seen your post here) and Nik (on the Intelligent Money sticky at the top of this forum) if you want to discuss things fully and privately.
There are plenty of others who could advise you here and they may offer their suggestions shortly.
All the best under the circumstances.
Appreciate your sympathy and thoughts on this.
If your father sells you his house he will have to redeem the mortgage in the process, so you as new owner(s) need to be able to pay for the whole thing either in cash or with a new mortgage. If you already own a residential property you would have to pay the enhanced rate of Stamp Duty (+3%)
If the house is sold/transferred for less than market value there has been a gift of the difference. This is a Potentially Exempt Transfer so no tax on the gift at the time it is made but it will count towards IHT if he dies within 7 years after the gift.
If the house is sold/transferred for less than market value there has been a gift of the difference. This is a Potentially Exempt Transfer so no tax on the gift at the time it is made but it will count towards IHT if he dies within 7 years after the gift.
Depending on your circumstances, the "easy" answer is for you to lend your Dad £60k so that he can pay off that mortgage when it has to be repaid (if it can't be renewed/extended). This may mean increasing the mortgage on your own property to release cash. All subject to personal circumstances.
For what it's worth, you can either make the loan,
For what it's worth, you can either make the loan,
- At market rate - so your Dad would effectively be paying your interest. Although that would be taxable income in your hands.
- Interest free - in which case you are gifting the market interest to your Dad each year. These gifts are PETs and will cease to be relevant after 7 years.
Im not an expert, but few thoughts:
- Is he even over the inheritance tax threshold? That may be out of scope.
- There may be a deprivation of assets issue re care homes but you can possibly defend against that with the documentation re the mortgage, medical papers etc. He was going to lose the property anyway in 2021 so you had no choice.
- If he goes into the care home you could sell the property at market rate to fund his care. It’s his money after all.
- Is he even over the inheritance tax threshold? That may be out of scope.
- There may be a deprivation of assets issue re care homes but you can possibly defend against that with the documentation re the mortgage, medical papers etc. He was going to lose the property anyway in 2021 so you had no choice.
- If he goes into the care home you could sell the property at market rate to fund his care. It’s his money after all.
Blue One said:
I appreciate your comments on this.
Your best bet to move this forwards is, perhaps, a chat with the PH mortgage-man Sarnie and depending on the outcome any decent solicitor should be able to assist with resultant conveyancing, IHT guidance etc. As it's his house "Dad" would need to be the client. The rules around ‘Deprivation of Assets’ will prevent you/your father from disposing of his assets and leaving the state to pick up the bill (and rightly so!)
Firstly, call the ’Attendance Allowance’ hotline and request the forms for this benefit.
You should also seek to undertake a care needs assessment via the local authority - this will establish eligibility for;
- NHS nursing care
- NHS continuing care
Make sure you are present at the assessment.
For more specific advice you would need to engage an IFA with the relevant qualifications and experience to help you plan.
Firstly, call the ’Attendance Allowance’ hotline and request the forms for this benefit.
You should also seek to undertake a care needs assessment via the local authority - this will establish eligibility for;
- NHS nursing care
- NHS continuing care
Make sure you are present at the assessment.
For more specific advice you would need to engage an IFA with the relevant qualifications and experience to help you plan.
rockin said:
Your best bet to move this forwards is, perhaps, a chat with the PH mortgage-man Sarnie and depending on the outcome any decent solicitor should be able to assist with resultant conveyancing, IHT guidance etc. As it's his house "Dad" would need to be the client.
I wouldn’t suggest using a solicitor for IHT advice, investing assets for the provision of Long Term Care and tax efficiency is firmly in the domain of a good IFA.Edited by DoubleSix on Monday 16th December 10:46
DoubleSix said:
rockin said:
Your best bet to move this forwards is, perhaps, a chat with the PH mortgage-man Sarnie and depending on the outcome any decent solicitor should be able to assist with resultant conveyancing, IHT guidance etc. As it's his house "Dad" would need to be the client.
I wouldn’t suggest using a solicitor for IHT advice, investing assets for the provision of Long Term Care and tax efficiency is firmly in the domain of a good IFA.Edited by DoubleSix on Monday 16th December 10:46
Sarnie and a decent solicitor can handle all of this very cost effectively.
If it transpires there are assets to invest then this of course is a different matter, but at this point that has not been raised.
Would contacting the mortgage company be an option, they don't want the publicity of kicking an old man out of their house, especially if they are sick. Do they have discretion?
That or kicking the the can down the road a bit, but legalities, when caring for your dad is hard & might be why your trying to deal with this early.
That or kicking the the can down the road a bit, but legalities, when caring for your dad is hard & might be why your trying to deal with this early.
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