Mortgage for my parents?

[Greatscottshesgotit]

I’ve done a fair bit of googling but seems unclear so any anecdotal info would be useful before I speak to my parents about this!

Elderly parents own home outright, we live in a fairly cheap area so we are probably only talking 100k value. The home is not suitable really, they make do but really the ideal would be a ground floor flat or bungalow, obviously bungalows are a premium and to get them moved they’d need maybe 30/40k more. They have a decent monthly income with pensions etc so I am not concerned with running costs, just the purchase.

I would like to contribute the difference, preferably via a mortgage or loan. I do have savings but they are tied up and I’m not keen to leave myself without, I have a good income and can afford the repayment easily enough.

Is this legal? Is this something other people have done? Can I partially mortgage something I don’t own or would I need to simply “give” them the cash and have it legally agreed that a portion of the house is mine (to avoid inheritance issues), I would never want it to be sold until they are both gone, there is no risk of that.

I want them to be comfortable and I in the means to help, but what is the best way? Has anyone done this or heard about it? Thanks!

You can't lend them some of the money and get a mortgage. The mortgage company won't accept a second loan on the property. It would have to be an outright gift or a part-ownership arrangement.

If it is "legally agreed' that a portion of the house is yours, then you will own it So it wouldn't be mortgaging somethinng that isn't yours.

However, mortgage companies can be reluctant to have people (your parents) on the deeds who aren't on the mortgage. And can be wary of having some owners not resident. It's not necessarily impossible, but will certainly narrow the pool of lenders.

You could mortgage jointly, but would need to agree in advance who pays what - maintenance as well as mortgage costs.

You'll need to check the tax implications - would your parents 'rent' your share from you orr not, is there a beneficial interest created, if you already own a house but it's their sole residence what rate of stamp duty applies?

And you say you wouldn't want to sell, but they might need to for care costs. Or you might need to because of an unforseen financial emergency. You'll need to think through all the possible contingencies.

You could borrow against your own home then lend the money to them and secure that with a mortgage over their new property. Alternatively you could have the property in the names of all three of you but hold it for your parents so you can be on the mortgage for that property.

I would chat it through with potential lenders to see what they would be happy with.