Newbie - ish! Need some financial/ business ideas
Discussion
Hi all,
I posted here once upon a time but have recently returned to see what's going on and as always, this site never ceases to amaze...
Well, as the title suggests I want to give a very close family member some ideas or advice with their current financial/ life situation. I just wanted to throw the situation out here to see if any of you have any suggestions or advice.
Here's the situation: My mum (single) has been working for the last 15 years in a very noble job and is very good at it but it looks like it could be coming to an end fairly soon (out of her control). She doesn't really have much in the way of savings but has a lovely house that she has painstakingly renovated herself over the last 16 years. It is worth a fair amount and her mortgage is very low, so she has all her equity tied up in the house. She has been thinking about how to generate an income should the job go tits up. I have suggested renting it out or starting a B&B business. She is desperate to keep hold of it but is coming round to the reality of possibly having to sell it, move out of London and buy something smaller to release some £££. Her family/ friends are all in London so this is very much a last resort.
I really want to figure out a way for her to keep the house, release some funds and have some fun!
Any suggestions, advice welcome.
Cheers
I posted here once upon a time but have recently returned to see what's going on and as always, this site never ceases to amaze...
Well, as the title suggests I want to give a very close family member some ideas or advice with their current financial/ life situation. I just wanted to throw the situation out here to see if any of you have any suggestions or advice.
Here's the situation: My mum (single) has been working for the last 15 years in a very noble job and is very good at it but it looks like it could be coming to an end fairly soon (out of her control). She doesn't really have much in the way of savings but has a lovely house that she has painstakingly renovated herself over the last 16 years. It is worth a fair amount and her mortgage is very low, so she has all her equity tied up in the house. She has been thinking about how to generate an income should the job go tits up. I have suggested renting it out or starting a B&B business. She is desperate to keep hold of it but is coming round to the reality of possibly having to sell it, move out of London and buy something smaller to release some £££. Her family/ friends are all in London so this is very much a last resort.
I really want to figure out a way for her to keep the house, release some funds and have some fun!
Any suggestions, advice welcome.
Cheers
jamesuk28 said:
Equity release. Depending on her age, she can release a good percentage of her equity and live in the house until she dies or wants to leave. Plenty of companies do it.
Re-mortage on an interest only basis and let the house pay itselef off after you die or insure to pay it off on death?
If she isn't desparate for large amounts of cash, she could take in a lodger and generate some Tax Free income under the "Rent A Room" scheme.
If she was going doen the full B&B route, she would have to apply for planning permision as this would constitute a "business". If permission was granted, she would also have to start returning this income under the Self Asssessment system.
If she was going doen the full B&B route, she would have to apply for planning permision as this would constitute a "business". If permission was granted, she would also have to start returning this income under the Self Asssessment system.
jamesuk28 said:
Equity release. Depending on her age, she can release a good percentage of her equity and live in the house until she dies or wants to leave. Plenty of companies do it.
NOOOOO! Complete stitch as 1. its unregulated and therefore liable to abuse of terms. 2. the biggest issue is that they give bugger all and want a lot back. Seriously not a great idea unless someone has no kids/relatives and doesnt care about the house once they pop off.
In my line of work have met a fair few people who have done it and regret it due to either a) realising after the fact they could have generated the money elsewhere for less cost and b) once you're in it its very expensive to get out of it if you wish.
A better idea maybe for you to purchase a share by you getting a mortgage on part of the property if allowed to do it. This way she gets cash, you get equity in a second property without the headache and she can avoid some part of the IHT liability (as long as she lives 7 years and spends all the money received!) as part of her estate will be yours.
Rent a room is good = £4250 (i think, dont have my tax tables on me) tax free income per annum.
B&B is good as its an income and if partioned of really really well it could even be argueable as a business and potential for reduction on IHT but that would take some thinking.....
Its all been said I think. Ive done rent a room before now, nice little earner and the blood thirsty tax man doesn't take a penny. She could generate a nice little 4-5grand and a part time job, she would be laughing surely?.
I wouldn't go down any of the equity release schemes and whats the point in remortgaging if the mortgage is really low.
I wouldn't go down any of the equity release schemes and whats the point in remortgaging if the mortgage is really low.
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