Buying house with DM

[SpidersAreShitheads]

Hi,

I'm in the process of selling my house and DM is selling hers. The plan is to buy a bigger house for me, my DP and DC and to build my DM an annexe. She's disabled and would be a huge help to her for me to be close by. I'm struggling to provide enough support to her at the moment (I also have two disabled DC).

The money from my DM's house, plus a small mortgage would finance the initial purchase. Only my DM would be on the mortgage - and therefore only she would be on the deeds.

When my house sells, in a couple of months, I'll be contributing around £40,000 to renovate/improve the property for my DM's benefit.

We'll then all be living there, separately but together.

The question I have is over security for me - if my DM suddenly went into care (hopefully not!) I'm assuming the property would have to be sold to fund that, and the money I contributed would be ignored. I don't have any other assets/significant savings so that would mean I'd probably have to rent which would be a huge problem, given my DC's needs.

I wondered about a Trust. We're not making this move to try and be sneaky about IHT - the property will be valued at below the IHT threshold and DM doesn't have anything else. We're also not doing it to try and avoid her paying for care - I hope very much she won't ever need to go into care, that's why we're moving closer together.

Ideally though, I want some protection for the money I'll be investing - not because I think my DM will rip me off, I trust her 100% - but against care costs etc. Would a Trust suffice? And are there any issues with what we're planning to do?

We were wondering about my DP getting a mortgage with her, but I think that might make things more complicated?

It's bad enough trying to find a house that's suitable - but all of this is making my brain ache. Does anyone know the answer? I can only find stuff online about parents giving their kids a deposit!

Sorry I can't help with the legalities of it, but this might bump it for someone who can.

My initial though was where your Mum is going to live after her home is sold in the intervening months and months and months from buying the new house, drawing up the plans, getting planning permission, finding a builder, sitting on the builder's waiting list for 10 months, then the building work ?

Honestly, you need a solicitor to draw up a proper trust. Me and my brother are in a similar situation and he's just had everything reviewed and rewritten. As you say, this isn't about your DM, it's about a future govt coming for half your house.

I don’t think you can put a mortgaged property into trust. Assets must be freely owned. Why would the house be in her name?

Definitely get legal advice as yes, you would be forced to sell to pay for care fees, plus IHT, so not a good move.

@Kite22

Sorry I can't help with the legalities of it, but this might bump it for someone who can.

My initial though was where your Mum is going to live after her home is sold in the intervening months and months and months from buying the new house, drawing up the plans, getting planning permission, finding a builder, sitting on the builder's waiting list for 10 months, then the building work ?

Aah thank you for the bump @Kite22. Long weekend with the DC and work, so I'm only just getting back online to catch up now.

re the practicalities of it, that's all taken care of. She would move into the new house while I'm selling mine, and what happens next depends on the type/size of house we buy.

There's one with an integrated garage which is huge so estimates to convert all of that are 4-6 weeks max. That house is a 5-bed so we could manage to all live together after my house is sold and while her building is being finished.

I've been in touch with some local builders and round here there are plenty who don't have huge waiting lists (I'm in the SW sort of).

The other alternative is to buy a cheaper house with more outside space so her money could build most of the basics while I sell up mine.

Either way, the practicalities are generally fine. The only slight sticking point is planning permission so I'm trying to find a house that's already big enough so we don't need planning permission because that's a right nightmare process. I'm worried about buying somewhere and then getting refused planning so we'd have to get approval before the sale - and obviously that's really really hard with timescales.

It is tricky finding the right house, there aren't a lot which tick the boxes. And really we're committing to staying here for quite a long time as my DM won't want to move again and I'm trying to make sure there's enough room for my DC when they're older. It's not easy, but possible. It's just the legal stuff which is making me want to give up!

I have my own business where I work F/T, I home educate two SEN kids (one with very substantial needs) and I have DM who has cerebral palsy who I need to be there for. She got scammed a few weeks ago - and it was so obvious it was a scammer. I can't keep her safe and protected from the other side of the town. I'm absolutely shattered. An annexe would make life SO much easier for me to do what I need to but the bloody logistics of this are making me want to give up.

It doesn't help that DM is burying her head in the sand and insisting that it will all be "fine" and no one would ever take out house and that she'll never need care anyway. She keeps telling me she's always been lucky so she knows things will be OK. Not my idea of a sound basis for my DC's future....

@MaChienEstUnDick - exactly! This is all the assets both me and my DM have so it has to be protected. My DC wouldn't cope well in rented accommodation and I can't be keeping my fingers crossed that any government would choose to be benevolent should my DM no longer be safe at home.

@Snorkello - mortgage companies aren't keen on anyone else being on the deeds if only one person is on the mortgage. I can't go on the mortgage as my house needs to sell a few months after hers (for long and complicated reasons I won't bore you with). So that means the house would have to be in her sole name. The mortgage would only be for a 10 yr term and we'd hope to pay it off sooner. My DM is happy for me to go on the deeds as soon as we can, which should be when the mortgage is paid. However, she's 74 now and god forbid something happens in the next 10 years, we'd be stuffed.

I would say think very hard before doing this. If I were you I would have your mum buy a suitable property close to you, rather than live in the same house.

I'm not a lawyer or mortgage broker so no idea if this would work, but when you sell your house can you not, instead of you paying for renovations, buy part of the property and renegotiate the mortgage to put you on it and the deeds? Then your DM can use the cash for the renovations.

Alternatively, have DM move into somewhere temporary until you sell. Then buy together.

You're right to be cautious about being left high and dry later if your DM needs care. Don't let your DM's optimism overrule your level headedness!

See a solicitor. This can be done. You would have an interest in the property under a constructive trust. Best to have it all documented.

You will need to be on the mortgage as well as your Mum. It would then be in joint names. You can then have a declaration of trust setting out your respective shares.

Mortgage lenders refuse to allow you to do this unless you are both on the mortgage.

@Snorkello

I don’t think you can put a mortgaged property into trust. Assets must be freely owned. Why would the house be in her name?

Definitely get legal advice as yes, you would be forced to sell to pay for care fees, plus IHT, so not a good move.

It's fine to have a trust in respect of mortgaged assets but obviously only the equity in the house would belong to the beneficiaries in the trust. You need legal advice but, yes, you do need a trust that sets out your respective shares and contributions. Whoever is the legal owner is also going to be the person named on the mortgage. Might it be better for the house to be owned in yours and your DP's names but with your DM having a lifetime right to occupy under a trust (and provisions to receive the money she put in if you were to sell)? There would still be a risk with care home fees if the council argued that this arrangement was intended to avoid fees (in which case it could be set aside), but that sounds like a better plan. Otherwise, if your DM is the legal owner, what happens when she dies?

I'm sure you will seek advice anyway but friends of ours were in a very similar position, sold their house and a parents and bought one beautiful property with space for them all (parent was to have an outbuilding done up for their own space but majority time with family in main building).

The parent's health deteriorated much faster than expected and they were in a care home before the the transaction was even completed. While the plan had been that the move would enable parent to live at home for longer, the council investigating and keen to recoup the cost of care from the house sale.

Our friends are of fairly modest means and regardless of the outcome it has caused them huge stress, so please be prepared for that eventuality.

Just put the house in your name only if you can it will save a lot of stress in the future

Agree with others - see a solicitor to at least protect your deposit and discuss registering your beneficial interest in the property under a trust.

Also ask your solicitor to check the terms of your mother’s mortgage to ensure it is one that can be readily paid off. Some types of mortgage (equity release or lifetime mortgage might be very expensive to redeem).

Do not under estimate the cost of care home fees (at lease £1,000 a week outside the south east).

Can you consider other options such as buying the house in your own name and your mum funding some modest renovations from the proceeds of selling her home (whilst retaining the majority of her capital as savings?

Are you an only child? Do you have siblings? What’s their view if you have any? Are you the sole beneficiary of your DM’s will?

Can someone aged 74 easily get a mortgage? I would go for ownership by you and DH only. DM can give her money to you. Now - if no one else is inheriting it. You get the mortgage. You get an agreement drawn up about living arrangements. You said IHT doesn’t come into play, so why not gift the money now? It surely would be easier for you to get a mortgage?

If she wants her own place, and to retain her money, buy separately but close to you.