A quick mortgage application question.
Discussion
Morning all 
I’ll try and keep things brief.
We currently rent, are happy where we are and our landlord has told us that he would be willing to sell the property to us.
I’m currently self employed, and have been so for the last 22 months. My earnings are stable and comfortable.
I’ve recently received an unofficial, (at the moment), offer to go ‘employed’, but this would mean a pay cut of around 35-40% before any overtime was taken into consideration.
We are in the process of selling my late-Fathers villa in Spain, which once completed would allow us to place around a 65% deposit on the property that we currently rent. Our rent is £1500 pcm, whilst the predicted mortgage costs over 15 years would be around £275-£300 pcm.
Generally, how fussy are lenders when it comes to seeing stable employment history, particularly the length of time that an applicant has been with his current employer?
Would I be better not taking the new employment role until such time as any mortgage application has been accepted and the money is in the bank, so to speak?
In advance, many thanks
I’ll try and keep things brief.We currently rent, are happy where we are and our landlord has told us that he would be willing to sell the property to us.
I’m currently self employed, and have been so for the last 22 months. My earnings are stable and comfortable.
I’ve recently received an unofficial, (at the moment), offer to go ‘employed’, but this would mean a pay cut of around 35-40% before any overtime was taken into consideration.
We are in the process of selling my late-Fathers villa in Spain, which once completed would allow us to place around a 65% deposit on the property that we currently rent. Our rent is £1500 pcm, whilst the predicted mortgage costs over 15 years would be around £275-£300 pcm.
Generally, how fussy are lenders when it comes to seeing stable employment history, particularly the length of time that an applicant has been with his current employer?
Would I be better not taking the new employment role until such time as any mortgage application has been accepted and the money is in the bank, so to speak?
In advance, many thanks
I suspect it will depend on the lender. Some won’t like self employed, whereas some won’t like a recent change of employment status.
In my case, Santander were happy to lend on the basis of a newly signed employment contract. Others wouldn’t touch without some length of service.
Speak to a broker (Sarnie on here is good). I don’t think you’ll have too many problems at 35%LTV though.
In my case, Santander were happy to lend on the basis of a newly signed employment contract. Others wouldn’t touch without some length of service.
Speak to a broker (Sarnie on here is good). I don’t think you’ll have too many problems at 35%LTV though.
When I bought a few years ago as self employed, the mainstream lenders wanted 3 years of accounts before they'd even look at me.
I only had my first year of accounts but I reached out to a few brokers and one of them said he could sort me out, and he did. Ended up with a deal with Halifax through him and it was pretty competitive too... I didn't pay the premium I was expecting to.
So you may not get any joy with a generic comparison website or going into branch, but if you're willing to earn some commission for a broker you might have some luck.
Good luck, it sounds like buying will be well within your comfort zone so any pragmatic process shouldn't hold you back.
I only had my first year of accounts but I reached out to a few brokers and one of them said he could sort me out, and he did. Ended up with a deal with Halifax through him and it was pretty competitive too... I didn't pay the premium I was expecting to.
So you may not get any joy with a generic comparison website or going into branch, but if you're willing to earn some commission for a broker you might have some luck.
Good luck, it sounds like buying will be well within your comfort zone so any pragmatic process shouldn't hold you back.
105.4 said:
We are in the process of selling my late-Fathers villa in Spain, which once completed would allow us to place around a 65% deposit on the property that we currently rent.
I hate to come across as a PH-stalker but…..Isn’t that your young daughter’s money?
You may have an investment plan that sees her putting it in to your house (which is a different debate) but if that is the case, I would imagine there are legal matters which a lender would need to know about if you are buying a house with it.
Muzzer79 said:
I hate to come across as a PH-stalker but…..
Isn’t that your young daughter’s money?
You may have an investment plan that sees her putting it in to your house (which is a different debate) but if that is the case, I would imagine there are legal matters which a lender would need to know about if you are buying a house with it.
Morning Muzzer Isn’t that your young daughter’s money?
You may have an investment plan that sees her putting it in to your house (which is a different debate) but if that is the case, I would imagine there are legal matters which a lender would need to know about if you are buying a house with it.
It is now solely my daughter’s inheritance, and well done for remembering a thread from nearly two years ago, (the wheels of bureaucracy turn very slowly).
The situation is thus;
In Spain a minor can legally own, buy and sell a property. The fact that my Wife is parent / guardian and Executor of the Estate makes no difference. We have to show to the Spanish Courts that the funds from the sale of the villa will be used solely for our daughters long term benefit, (and rightly so).
It’s taken a long time to figure out a solution to this problem, but between our English and our Spanish Solicitors we have done, and there is case law in both countries to verify our plans. It was all a bit 11th hour, as we got the call from our U.K. Solicitor as we were driving up to Andorra on Monday, as she was about to go on Holiday on Tuesday.
We sent the our Spanish Solicitor the details of the plan on Monday, and when we took her out for dinner yesterday evening, she confirmed that it would work at her, (Spanish) end. Our Spanish Realtor has also confirmed that this plan would work for her.
We will be making an application to the U.K. Family Courts with our plan to sell the Spanish property and put the funds of that sale towards a U.K. property. Our daughter would retain 65% equity (for example), of the U.K. property whilst my Wife and I would have a 35% stake. Agreements would be drawn up to ring fence our daughters equity in the property in the event of a divorce, and once she reaches 18 / 21 / 25, our daughter, as the majority shareholder, can choose to either buy our stake or sell hers.
From what I am told there is caselaw of very similar situations arising in the past where such applications have been successful.
We will then take this U.K. Family Court judgement to the Spanish Courts for them to rubber stamp, at which point the Spanish property can be sold.
We are told that making such an application to the U.K. Family Courts will take about 3 months, once our U.K. Solicitor returns from holiday at the beginning of September, and that it would be a quick and straightforward application to the Spanish Courts to get things sorted at that end.
edited for a spelling mistake
Edited by 105.4 on Thursday 17th August 10:18
Edited by 105.4 on Thursday 17th August 10:42
You need specialist advice... speak to a broker offline and direct.
Ignoring the legal aspect here, are your estimated mortgage costs correct? 275-300 per month over 15 years implies a mortgage of 35-40k. You have checked rates? At that amount and given complexity might want be worth exploring other funding options with a IFA.
Ignoring the legal aspect here, are your estimated mortgage costs correct? 275-300 per month over 15 years implies a mortgage of 35-40k. You have checked rates? At that amount and given complexity might want be worth exploring other funding options with a IFA.
Edited by OoopsVoss on Thursday 17th August 10:56
105.4 said:
Muzzer79 said:
I hate to come across as a PH-stalker but…..
Isn’t that your young daughter’s money?
You may have an investment plan that sees her putting it in to your house (which is a different debate) but if that is the case, I would imagine there are legal matters which a lender would need to know about if you are buying a house with it.
Morning Muzzer Isn’t that your young daughter’s money?
You may have an investment plan that sees her putting it in to your house (which is a different debate) but if that is the case, I would imagine there are legal matters which a lender would need to know about if you are buying a house with it.
It is now solely my daughter’s inheritance, and well done for remembering a thread from nearly two years ago, (the wheels of bureaucracy turn very slowly).
The situation is thus;
In Spain a minor can legally own, buy and sell a property. The fact that my Wife is parent / guardian and Executor of the Estate makes no difference. We have to show to the Spanish Courts that the funds from the sale of the villa will be used solely for our daughters long term benefit, (and rightly so).
It’s taken a long time to figure out a solution to this problem, but between our English and our Spanish Solicitors we have done, and there is case law in both countries to verify our plans. It was all a bit 11th hour, as we got the call from our U.K. Solicitor as we were driving up to Andorra on Monday, as she was about to go on Holiday on Tuesday.
We sent the our Spanish Solicitor the details of the plan on Monday, and when we took her out for dinner yesterday evening, she confirmed that it would work at her, (Spanish) end. Our Spanish Realtor has also confirmed that this plan would work for her.
We will be making an application to the U.K. Family Courts with our plan to sell the Spanish property and put the funds of that sale towards a U.K. property. Our daughter would retain 65% equity (for example), of the U.K. property whilst my Wife and I would have a 35% stake. Agreements would be drawn up to ring fence our daughters equity in the property in the event of a divorce, and once she reaches 18 / 21 / 25, our daughter, as the majority shareholder, can choose to either buy our stake or sell hers.
From what I am told there is caselaw of very similar situations arising in the past where such applications have been successful.
We will then take this U.K. Family Court judgement to the Spanish Courts for them to rubber stamp, at which point the Spanish property can be sold.
We are told that making such an application to the U.K. Family Courts will take about 3 months, once our U.K. Solicitor returns from holiday at the beginning of September, and that it would be a quick and straightforward application to the Spanish Courts to get things sorted at that end.
I'm pleased that you have an agreement drawn up that means your daughter can access her money, although on the face of it I'm a little concerned about her moral dilemma when she reaches that age in terms of if she wants to access her money, it would potentially mean making you homeless.
But that's by-the-by.
For this thread, you may want to clarify with a broker whether a lender will need to know about this arrangement and about the fact that a large portion of the equity will come from your daughter's trust?
I guess that they will not care, because it's just cash to them that's as at risk as your cash is, but best to make sure.
Sarnie, on these pages, is very good as a broker.
OoopsVoss said:
You need specialist advice... speak to a broker offline and direct.
Ignoring the legal aspect here, are your estimated mortgage costs correct? 275-300 per month over 15 years implies a mortgage of 35-40k. You have checked rates? At that amount and given complexity might want be worth exploring other funding options with a IFA.
I’ve used the mortgage calculator on the Rightmove website, putting in a slightly lowball deposit on a slightly higher than anticipated purchase cost of the U.K. property, and nudged the interest rate up a bit.Ignoring the legal aspect here, are your estimated mortgage costs correct? 275-300 per month over 15 years implies a mortgage of 35-40k. You have checked rates? At that amount and given complexity might want be worth exploring other funding options with a IFA.
Edited by OoopsVoss on Thursday 17th August 10:56
I know that such tools aren’t mega accurate, but I would expect them to be in the rough ballpark.
IIRC, the cost per month over 15 years was £278.
As for an IFA, I’ve had a few family members who have been robbed blind by them, (“give me all of your savings and by this time next year Rodney, you’ll be a millionaire”). A couple of years later a lifetimes worth of savings had disappeared, along with the IFA, who had conveniently relocated to Thailand or Dubai.
’savings and investments can go down as well as up, and I assume no risk or responsibility for any losses’
Personally I’d trust an IFA with money about as much as I’d trust Gary Glitter with my teenage daughter.
But ultimately I’m not the Executor, so the final decision isn’t mine to make. My Wife on the other hand, is incredibly gullible, very naive and overly trusting, and therein lies the problem.
If this money doesn’t get tied up in bricks and mortar for us, some smooth talking shyster will rinse my Wife and daughter of every last penny, of that I can be certain.
105.4 said:
As for an IFA, I’ve had a few family members who have been robbed blind by them, (“give me all of your savings and by this time next year Rodney, you’ll be a millionaire”). A couple of years later a lifetimes worth of savings had disappeared, along with the IFA, who had conveniently relocated to Thailand or Dubai.
’savings and investments can go down as well as up, and I assume no risk or responsibility for any losses’
Personally I’d trust an IFA with money about as much as I’d trust Gary Glitter with my teenage daughter.
But ultimately I’m not the Executor, so the final decision isn’t mine to make. My Wife on the other hand, is incredibly gullible, very naive and overly trusting, and therein lies the problem.
If this money doesn’t get tied up in bricks and mortar for us, some smooth talking shyster will rinse my Wife and daughter of every last penny, of that I can be certain.
You really need to let this scepticism about IFAs go. ’savings and investments can go down as well as up, and I assume no risk or responsibility for any losses’
Personally I’d trust an IFA with money about as much as I’d trust Gary Glitter with my teenage daughter.
But ultimately I’m not the Executor, so the final decision isn’t mine to make. My Wife on the other hand, is incredibly gullible, very naive and overly trusting, and therein lies the problem.
If this money doesn’t get tied up in bricks and mortar for us, some smooth talking shyster will rinse my Wife and daughter of every last penny, of that I can be certain.
There a lot of perfectly reputable people who will advise you where to place money in low risk investments. You just need to do research to find which one.
There are shysters out there, they are usually easy to spot by the fact they offer large gains in a short amount of time, but that doesn't mean they are all like that.
I'm still not convinced that this is a sound investment for your daughter, but as you rightly say, you are not the executor so I guess there's little you can do.
I'm not a solicitor but I do know a fair bit about Trusts and trust law in England and Wales.
If I've understood you correctly, your arrangement would require funds from the sale of the Spanish property to be passed to your daughter to hold absolutely under the terms of her Grandfather's will and as permitted by Spanish law.
She would then either gift those funds to you and your wife or, more likely, to place them in a trust where she is the beneficiary and you and your wife are the trustees.
The trust will mature at some point in your daughter's adulthood (potentially some way into her adulthood) at which point she will own absolutely the trust's assets. Those assets will be 65% of the current value of a residential property, the remaining 35% being owned by the former trustees of the former trust.
During the life of the trust, the trust objects will presumably be to provide residential accommodation for the beneficiary and to allow the beneficiary to accrue 65% of any capital appreciation generated by the property during the life of the trust.
The Trust will also provide a 65% subsidy on residential accommodation costs to the trustees during the life of the trust.
The beneficiary is, presumably, subject to risk of capital depreciation should house prices fall.
The trust presumably contains provisions for varying capital allocation should the beneficiary, trustees or other third parties invest in the trust asset
I would get a second legal opinion if I were you because I am astonished that any qualified solicitor with a current practicing certificate is advising that this is appropriate or legal
If I've understood you correctly, your arrangement would require funds from the sale of the Spanish property to be passed to your daughter to hold absolutely under the terms of her Grandfather's will and as permitted by Spanish law.
She would then either gift those funds to you and your wife or, more likely, to place them in a trust where she is the beneficiary and you and your wife are the trustees.
The trust will mature at some point in your daughter's adulthood (potentially some way into her adulthood) at which point she will own absolutely the trust's assets. Those assets will be 65% of the current value of a residential property, the remaining 35% being owned by the former trustees of the former trust.
During the life of the trust, the trust objects will presumably be to provide residential accommodation for the beneficiary and to allow the beneficiary to accrue 65% of any capital appreciation generated by the property during the life of the trust.
The Trust will also provide a 65% subsidy on residential accommodation costs to the trustees during the life of the trust.
The beneficiary is, presumably, subject to risk of capital depreciation should house prices fall.
The trust presumably contains provisions for varying capital allocation should the beneficiary, trustees or other third parties invest in the trust asset
I would get a second legal opinion if I were you because I am astonished that any qualified solicitor with a current practicing certificate is advising that this is appropriate or legal
In effect here aren't you really going for a 100% mortgage?
If your daughter is contributing all of the deposit which gives her 65% of the property you would need to borrow the 35% for you 35% stake. I would think this & your arrangement with your daughter would give the lenders more concern than you recently changing jobs.
If your daughter is contributing all of the deposit which gives her 65% of the property you would need to borrow the 35% for you 35% stake. I would think this & your arrangement with your daughter would give the lenders more concern than you recently changing jobs.
105.4 said:
I’ve used the mortgage calculator on the Rightmove website, putting in a slightly lowball deposit on a slightly higher than anticipated purchase cost of the U.K. property, and nudged the interest rate up a bit.
I know that such tools aren’t mega accurate, but I would expect them to be in the rough ballpark.
IIRC, the cost per month over 15 years was £278.
As for an IFA, I’ve had a few family members who have been robbed blind by them, (“give me all of your savings and by this time next year Rodney, you’ll be a millionaire”). A couple of years later a lifetimes worth of savings had disappeared, along with the IFA, who had conveniently relocated to Thailand or Dubai.
’savings and investments can go down as well as up, and I assume no risk or responsibility for any losses’
Personally I’d trust an IFA with money about as much as I’d trust Gary Glitter with my teenage daughter.
But ultimately I’m not the Executor, so the final decision isn’t mine to make. My Wife on the other hand, is incredibly gullible, very naive and overly trusting, and therein lies the problem.
If this money doesn’t get tied up in bricks and mortar for us, some smooth talking shyster will rinse my Wife and daughter of every last penny, of that I can be certain.
OK. You really need to take some long and hard deep breaths. Your family members weren't dealing with IFAs, but con men. IFAs (quality ones) don't work that way... especially if there as an I at the beginning. I know that such tools aren’t mega accurate, but I would expect them to be in the rough ballpark.
IIRC, the cost per month over 15 years was £278.
As for an IFA, I’ve had a few family members who have been robbed blind by them, (“give me all of your savings and by this time next year Rodney, you’ll be a millionaire”). A couple of years later a lifetimes worth of savings had disappeared, along with the IFA, who had conveniently relocated to Thailand or Dubai.
’savings and investments can go down as well as up, and I assume no risk or responsibility for any losses’
Personally I’d trust an IFA with money about as much as I’d trust Gary Glitter with my teenage daughter.
But ultimately I’m not the Executor, so the final decision isn’t mine to make. My Wife on the other hand, is incredibly gullible, very naive and overly trusting, and therein lies the problem.
If this money doesn’t get tied up in bricks and mortar for us, some smooth talking shyster will rinse my Wife and daughter of every last penny, of that I can be certain.
Your case Is both complex legally and financially. That alone is going to be a barrier for a traditional lender. As the amounts required are so low, you might be better looking at other options - if they are compatible with a trust. It needs specialist advice.
Thank you all for your advice. I mean that genuinely, even if it isn’t the news I want to hear.
Yes, the situation is complex, and I suspect that this was done by design by my late-Father in order to cause maximum chaos upon his departure. The Solicitors who’ve viewed the Will have all made similar comments about how a more complex and worse Will, (from a tax and administrative point of view), couldn’t have been written if they’d tried their hardest.
Where we stand now is that the Estate is currently in legal limbo. To try and simplify matters, it is now at the stage where it is neither owned by my Father, nor owned by the Trust / Executor / Beneficiary. We only have a very short window in which to transfer and set-up utilities, payments for utilities, (the reconnection costs out here can run into five figures, with reconnection lead times running into months), get the massively overgrown garden sorted before we start getting large fines for it presenting a fire risk, sort out ongoing maintenance of the property, insure the property, (wild fires are a huge and common problem out here), plus a whole host of other more minor issues and problems.
Legally, nothing can be done until title of deeds has been changed into my Wife’s / my daughters name. We cannot change the title of deeds unless we can prove to the Spanish authorities that the Estate will be administered in my daughters best interests, which is understandable.
The housing market out here is starting to plateau. I suspect that we have maybe six months left before there is a sharp downward trend.
That leaves us with two options.
1: Mothball the property uninsured with no utilities for the next six years until my daughter is 18, and hope that it isn’t destroyed by fire, (the last large wildfire was only a few km from here), squatted in, and doesn’t fall into too much disrepair.
2: Sell the property, which would require proving to the Spanish authorities that the proceeds of the sale would be used for our daughter best, long-term interests.
3: Renting it out, but this really isn’t a touristy area.
Under both British and Spanish law, the Executor of the Estate is legally obligated to work in the best interests of the beneficiaries. There is also a moral obligation to do.
As a parent, there is a strong moral obligation to work in your children’s best interests. I don’t see how option no:1 is in my daughters best interests, as there is the notable risk that in six years there may be nothing but a plot of rubble for her.
As intelligent as my Wife is, she can also be really, really naive. If a bunch of Travelers knocked on our door and offer to tarmac the driveway, even though the house is rented, she’d pay them. If a random stranger knocked on the door with a sob story about how their dog had been run over and they needed £2000 to pay the vet bill, but they promised to repay my Wife tomorrow, she’d give them the money, and then act all surprised that she’d never see them ever again. That’s just the sort of person that she is.
If this inheritance doesn’t get put into bricks and mortar, (something that someone can’t steal from her), then within 12 months or less, they’ll be nothing left.
What I am trying to ensure is that a lifetimes work by my Father ends up in my daughters pockets, not the pocket of some silver tongued stranger, as in my Wife’s mind, when she’s right, she’s right, and no amount of convincing is going to change her mind, right up to the point that she’s realised she’s f
ked up, by which time it’s too late.
When I gaze into my crystal ball, it ain’t painting a pretty picture tbh. I strongly suspect that this is all going to be for nowt.
Yes, the situation is complex, and I suspect that this was done by design by my late-Father in order to cause maximum chaos upon his departure. The Solicitors who’ve viewed the Will have all made similar comments about how a more complex and worse Will, (from a tax and administrative point of view), couldn’t have been written if they’d tried their hardest.
Where we stand now is that the Estate is currently in legal limbo. To try and simplify matters, it is now at the stage where it is neither owned by my Father, nor owned by the Trust / Executor / Beneficiary. We only have a very short window in which to transfer and set-up utilities, payments for utilities, (the reconnection costs out here can run into five figures, with reconnection lead times running into months), get the massively overgrown garden sorted before we start getting large fines for it presenting a fire risk, sort out ongoing maintenance of the property, insure the property, (wild fires are a huge and common problem out here), plus a whole host of other more minor issues and problems.
Legally, nothing can be done until title of deeds has been changed into my Wife’s / my daughters name. We cannot change the title of deeds unless we can prove to the Spanish authorities that the Estate will be administered in my daughters best interests, which is understandable.
The housing market out here is starting to plateau. I suspect that we have maybe six months left before there is a sharp downward trend.
That leaves us with two options.
1: Mothball the property uninsured with no utilities for the next six years until my daughter is 18, and hope that it isn’t destroyed by fire, (the last large wildfire was only a few km from here), squatted in, and doesn’t fall into too much disrepair.
2: Sell the property, which would require proving to the Spanish authorities that the proceeds of the sale would be used for our daughter best, long-term interests.
3: Renting it out, but this really isn’t a touristy area.
Under both British and Spanish law, the Executor of the Estate is legally obligated to work in the best interests of the beneficiaries. There is also a moral obligation to do.
As a parent, there is a strong moral obligation to work in your children’s best interests. I don’t see how option no:1 is in my daughters best interests, as there is the notable risk that in six years there may be nothing but a plot of rubble for her.
As intelligent as my Wife is, she can also be really, really naive. If a bunch of Travelers knocked on our door and offer to tarmac the driveway, even though the house is rented, she’d pay them. If a random stranger knocked on the door with a sob story about how their dog had been run over and they needed £2000 to pay the vet bill, but they promised to repay my Wife tomorrow, she’d give them the money, and then act all surprised that she’d never see them ever again. That’s just the sort of person that she is.
If this inheritance doesn’t get put into bricks and mortar, (something that someone can’t steal from her), then within 12 months or less, they’ll be nothing left.
What I am trying to ensure is that a lifetimes work by my Father ends up in my daughters pockets, not the pocket of some silver tongued stranger, as in my Wife’s mind, when she’s right, she’s right, and no amount of convincing is going to change her mind, right up to the point that she’s realised she’s f
ked up, by which time it’s too late.When I gaze into my crystal ball, it ain’t painting a pretty picture tbh. I strongly suspect that this is all going to be for nowt.
GT03ROB said:
In effect here aren't you really going for a 100% mortgage?
If your daughter is contributing all of the deposit which gives her 65% of the property you would need to borrow the 35% for you 35% stake. I would think this & your arrangement with your daughter would give the lenders more concern than you recently changing jobs.
Hmmm, yes. I can see where you’re coming from there Rob. It’s a very good point, and foolishly, one that I hadn’t given consideration to.If your daughter is contributing all of the deposit which gives her 65% of the property you would need to borrow the 35% for you 35% stake. I would think this & your arrangement with your daughter would give the lenders more concern than you recently changing jobs.
ClaphamGT3 said:
I'm not a solicitor but I do know a fair bit about Trusts and trust law in England and Wales.
If I've understood you correctly, your arrangement would require funds from the sale of the Spanish property to be passed to your daughter to hold absolutely under the terms of her Grandfather's will and as permitted by Spanish law.
She would then either gift those funds to you and your wife or, more likely, to place them in a trust where she is the beneficiary and you and your wife are the trustees.
The trust will mature at some point in your daughter's adulthood (potentially some way into her adulthood) at which point she will own absolutely the trust's assets. Those assets will be 65% of the current value of a residential property, the remaining 35% being owned by the former trustees of the former trust.
During the life of the trust, the trust objects will presumably be to provide residential accommodation for the beneficiary and to allow the beneficiary to accrue 65% of any capital appreciation generated by the property during the life of the trust.
The Trust will also provide a 65% subsidy on residential accommodation costs to the trustees during the life of the trust.
The beneficiary is, presumably, subject to risk of capital depreciation should house prices fall.
The trust presumably contains provisions for varying capital allocation should the beneficiary, trustees or other third parties invest in the trust asset
I would get a second legal opinion if I were you because I am astonished that any qualified solicitor with a current practicing certificate is advising that this is appropriate or legal
You’ve pointed out a lot of potential downsides there, which is good.If I've understood you correctly, your arrangement would require funds from the sale of the Spanish property to be passed to your daughter to hold absolutely under the terms of her Grandfather's will and as permitted by Spanish law.
She would then either gift those funds to you and your wife or, more likely, to place them in a trust where she is the beneficiary and you and your wife are the trustees.
The trust will mature at some point in your daughter's adulthood (potentially some way into her adulthood) at which point she will own absolutely the trust's assets. Those assets will be 65% of the current value of a residential property, the remaining 35% being owned by the former trustees of the former trust.
During the life of the trust, the trust objects will presumably be to provide residential accommodation for the beneficiary and to allow the beneficiary to accrue 65% of any capital appreciation generated by the property during the life of the trust.
The Trust will also provide a 65% subsidy on residential accommodation costs to the trustees during the life of the trust.
The beneficiary is, presumably, subject to risk of capital depreciation should house prices fall.
The trust presumably contains provisions for varying capital allocation should the beneficiary, trustees or other third parties invest in the trust asset
I would get a second legal opinion if I were you because I am astonished that any qualified solicitor with a current practicing certificate is advising that this is appropriate or legal
My initial thoughts as to where things could go wrong here are;
1; The beneficiary should really be paying 65% of the upkeep of the property.
That’s not going to happen. Even though my Wife is named as the Executor, it’s me that’s paying all the bills. By law, all associated costs can be reclaimed from the Estate. I wouldn’t accept a penny, and I’m in to this for vast sums of money. It will be the same deal with the upkeep of the property. I’m not taking a penny off of my little girl. I don’t see how any real man could do so with a clear conscience.
2; The value of the investment, (the property), could go down.
Yes, it could. But looking at constant ten year block trends, when was the last time that housing lost value over such a long time period.
3; When my daughter gets to 18 / 21 / 25, she will have the moral and legal right to either buy us out of our 35%, or sell her 65%, essentially making us homeless.
I’m fine with that. I’m aware it could and indeed probably will happen. At which point if the property is sold in its entirety, we’ll take whatever capital there is in our 35% and use it to buy somewhere else, even if it’s just a bedsit in the rough part of town.
My daughter will have the controlling share. She can call the shots.
105.4 said:
Thank you all for your advice. I mean that genuinely, even if it isn’t the news I want to hear.
Unfortunately the best advice here, is to get proper advice elsewhere....Your solicitors can hopefully point you towards some decent financial advisors. Especially as you are acting in the best interests of your daughter.
You are already outlining some risks with the situation / property, a decent IFA will help you hone and understand your risk profile / appetite and deliver you some (hopefully) workable options. As you are outlining property carries costs and with limited capital appreciation being cognitive of the risk is wise.
105.4 said:
Thank you all for your advice. I mean that genuinely, even if it isn’t the news I want to hear.
Yes, the situation is complex, and I suspect that this was done by design by my late-Father in order to cause maximum chaos upon his departure. The Solicitors who’ve viewed the Will have all made similar comments about how a more complex and worse Will, (from a tax and administrative point of view), couldn’t have been written if they’d tried their hardest.
Where we stand now is that the Estate is currently in legal limbo. To try and simplify matters, it is now at the stage where it is neither owned by my Father, nor owned by the Trust / Executor / Beneficiary. We only have a very short window in which to transfer and set-up utilities, payments for utilities, (the reconnection costs out here can run into five figures, with reconnection lead times running into months), get the massively overgrown garden sorted before we start getting large fines for it presenting a fire risk, sort out ongoing maintenance of the property, insure the property, (wild fires are a huge and common problem out here), plus a whole host of other more minor issues and problems.
Legally, nothing can be done until title of deeds has been changed into my Wife’s / my daughters name. We cannot change the title of deeds unless we can prove to the Spanish authorities that the Estate will be administered in my daughters best interests, which is understandable.
The housing market out here is starting to plateau. I suspect that we have maybe six months left before there is a sharp downward trend.
That leaves us with two options.
1: Mothball the property uninsured with no utilities for the next six years until my daughter is 18, and hope that it isn’t destroyed by fire, (the last large wildfire was only a few km from here), squatted in, and doesn’t fall into too much disrepair.
2: Sell the property, which would require proving to the Spanish authorities that the proceeds of the sale would be used for our daughter best, long-term interests.
3: Renting it out, but this really isn’t a touristy area..
I don’t think anyone is suggesting that the Spanish property shouldn’t be sold - that’s clearly the right thing to put in motion.Yes, the situation is complex, and I suspect that this was done by design by my late-Father in order to cause maximum chaos upon his departure. The Solicitors who’ve viewed the Will have all made similar comments about how a more complex and worse Will, (from a tax and administrative point of view), couldn’t have been written if they’d tried their hardest.
Where we stand now is that the Estate is currently in legal limbo. To try and simplify matters, it is now at the stage where it is neither owned by my Father, nor owned by the Trust / Executor / Beneficiary. We only have a very short window in which to transfer and set-up utilities, payments for utilities, (the reconnection costs out here can run into five figures, with reconnection lead times running into months), get the massively overgrown garden sorted before we start getting large fines for it presenting a fire risk, sort out ongoing maintenance of the property, insure the property, (wild fires are a huge and common problem out here), plus a whole host of other more minor issues and problems.
Legally, nothing can be done until title of deeds has been changed into my Wife’s / my daughters name. We cannot change the title of deeds unless we can prove to the Spanish authorities that the Estate will be administered in my daughters best interests, which is understandable.
The housing market out here is starting to plateau. I suspect that we have maybe six months left before there is a sharp downward trend.
That leaves us with two options.
1: Mothball the property uninsured with no utilities for the next six years until my daughter is 18, and hope that it isn’t destroyed by fire, (the last large wildfire was only a few km from here), squatted in, and doesn’t fall into too much disrepair.
2: Sell the property, which would require proving to the Spanish authorities that the proceeds of the sale would be used for our daughter best, long-term interests.
3: Renting it out, but this really isn’t a touristy area..
What’s being questioned is how to invest the proceeds.
105.4 said:
If this inheritance doesn’t get put into bricks and mortar, (something that someone can’t steal from her), then within 12 months or less, they’ll be nothing left
Again, why is it a house or nothing?This is where your blinkered attitude to investment and IFAs let you down. Christ, at the moment you could stick the money in a bank and earn a decent interest rate (not that I suggest you do)
IFAs does not mean conmen and thieves. It means people who make sound investment advice in areas, if they operate with integrity, that they are not beneficiaries of.
If you won the lottery, what do you think the first thing is that Camelot does? They put you on to an IFA.
Do you think that all those lottery winners in the last 30 years have been scammed?
Finally, whilst you may be comfortable with your daughter’s option to make you homeless when she is old enough to manage her own inheritance, think of her - what kind of position does that put her in?
I wouldn’t make my parents homeless, but is it also fair if I can’t get the money I am entitled to without doing that?
Actually, never mind homelessness, what about financial hardship?
“Sorry mum and dad, I need my money now for xyz. I know your approaching retirement, but you’re going to have to leave the house that you’ve lived in for years to go into rented or some s
tty council accommodation because that’s all you can afford”It’s not fair on her. My advice is that if you want to invest in a house then do so, just not yours. It’s too messy, don’t mix business and family.
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