First time buying advice?

[vegetablelasagne]

Hi - apologies if this is on the wrong forum...

 

My mum owns her house outright. She's 71 and wants to help me and my daughter to buy a property/see that we inherit the house when she passes away.

 

Buying a house for us:

Personally - I'm currently self-employed and don't earn very much, I'm reliant on Housing Benefit for my rent.

She has a 18K deposit we could use, but obviously I can't get a mortgage with my current earnings.

So the only option we can think of is Equity Release.

Could somebody shed some light on this option as it appears to be a bad move from the research that I've done.

 

Inheriting the house:

We've thought about switching the house over into my name, so when/if she ever has to go into a home, the equity from the house wouldn't go on home fees?

But in doing this, I'm assuming that I'd have to pay the bills on the house which I can't afford to do right now.

 

Any help/tips/ideas would be greatly appreciated - thank you.

[unclebulgaria67]

Your Mum should not touch Equity release, as that will probably be an expensive way of helping family.

 

I don't think anyone can advise you on an online forum, as we don't know your Mums financial and health situation. Also we don't know the current market value of her house.

 

This type of thing can be a bit if a minefield, as you can't be seen to deliberately give away assets, so you don't have to pay care home home fees if required. This is where your Mum should obtain proper legal advice about the best way to protect herself and any assets she owns, while helping family.

[vegetablelasagne]

Thanks unclebulgaria67(!)

 

Why is Equity Release not a good idea? Her house is worth 200K, she's a retired teacher and fit as a fiddle.....

[unclebulgaria67]

Thanks unclebulgaria67(!)

 

Why is Equity Release not a good idea? Her house is worth 200K, she's a retired teacher and fit as a fiddle.....

 

Just what i have read, that they give the home owner a cash sum in lieu of a charge on the house, but the terms offered are not great. It is not something to enter into without getting advice.

 

I am sure you have read articles on this subject and most say to tread very catefully.

 

Your Mum might live to over 100 as an increasing number do. She also be lucky never to need a care home and can live in her house with occasional help.

 

Perhaps the way forward is for family to buy a bigger house together. Mortgages are now available to pensioners and other members of the family can take out a joint mortgage with her. Has this option been looked into ?

[unclebulgaria67]

Useful link containing info on equity release

 

https://www.moneyadviceservice.org.uk/en/articles/equity-release

[honeybee13]

Hi - apologies if this is on the wrong forum...

 

My mum owns her house outright. She's 71 and wants to help me and my daughter to buy a property/see that we inherit the house when she passes away.

 

Buying a house for us:

Personally - I'm currently self-employed and don't earn very much, I'm reliant on Housing Benefit for my rent.

She has a 18K deposit we could use, but obviously I can't get a mortgage with my current earnings.

So the only option we can think of is Equity Release.

Could somebody shed some light on this option as it appears to be a bad move from the research that I've done.

 

Inheriting the house:

We've thought about switching the house over into my name, so when/if she ever has to go into a home, the equity from the house wouldn't go on home fees?

But in doing this, I'm assuming that I'd have to pay the bills on the house which I can't afford to do right now.

 

Any help/tips/ideas would be greatly appreciated - thank you.

 

Hello there.

 

To add to what UB has said, I think you need to check on the rules for Deprivation of Capital if someone needs to go into a care home. Someone can't just give away capital or a house and have no comeback unfotunately.

 

HB

[Mr.P]

To add to what UB has said, I think you need to check on the rules for Deprivation of Capital if someone needs to go into a care home. Someone can't just give away capital or a house and have no comeback unfotunately.

 

Absolutely true. Further more, whilst the mother still resides in the house, it would be classed as a "gift with reservation". The council would also look at the transaction and take steps to recover the asset regardless of the time elapsed between the date of gifting and the point of care being needed.

 

The other danger of transferring ownership is if one of the registered owners is declared bankrupt, the official receiver may well seize the property and evict the mother in order to sell it.

 

Another scheme to avoid is any Wealth Preservation Trust that claims to be able to protect assets from care home fees or inheritance tax. HMRC and local authorities have wised up to these schemes and will still regard the assets as being owned ny the person in question. http://www.bbc.co.uk/news/business-39589083

[ericsbrother]

switiching the house to you and your siblings wont stop it being used to pay for care fees unless you either move in or you mum then pays you a commercial rent and when she moves into a care home you take action to evict her from your property so she cant return. Even then they may decide that she has deliberately deprived herself of her assets so flogging the house as soon as you get it wouild be the way round that but the new owner wont want you mum living with them.

[citizenB]

https://www.moneyadviceservice.org.uk/en/articles/equity-release

 

Interesting article from the Money Advice service.

 

I think not being able to rely on the property for health care should Mum need to go into care at anytime would be the most important thing that would see me off looking at this way of releasing equity.

If you release equity from your home, you might not be able to rely on your property for money you need later in your retirement. For instance, if you need to pay for long-term care.

[Old Cogger]

also be aware - government legislation on selling or transfer house to children whilst elder parent alive has implications i.e. :- further life and care home charges think you are on a looser here due to circumstances???? sure others will advise also?

[vegetablelasagne]

Hello - is there a forum specifically for ways of buying a house?

I'd like some advice on some different options I've come up with buying my first property -  buying with my mum/a friend for example or advice on equity release etc

 

Thanks ever so much!

 

[dx100uk]

you might want to read again from post 1 here

you sort of asked this question 2 years ago.

threads now merged.

 

dx

 

[vegetablelasagne]

@dx100uk - great detective work 

 

I am aware of this thread - obviously - but the situation has changed which is why I'm seeking help.

 

In the meantime however - thanks for pointing me in the right direction.

[ericsbrother]

the only way it would work is if your mother sold you the house at close to the market value and then paid you a market rent to live there.

As you cant afford to buy it that will be a non-starter and the rental income would kill your benefits entitlement. If you became jopint tenants then you would have to pay stamp duty on the value of the property and the council may still try their luck with a charge against the property for care costs so you would need some guarantee that she doesnt need any care for a good number of years