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Original poster

Buying house for parent

36 replies

44Seahorses · 13/03/2022 09:15

Hello,
I want to buy a house for my mum to live in. She currently rents and has little financial security. I live in a house my husband owns outright, solely in his name. I've never bought a property. I wouldn't be charging my mum to live in the house, though she would pay bills and council tax.

Looking into it, it seems I can't get a standard mortgage for a house I won't live in, but I can't get a buy to let for a close family member.

Can anyone advise if there is a way around this? Could I put her on the mortgage even though she doesn't have much income and won't be paying it, and would that make it all above board?

It all seems unnecessarily restrictive. What would be the consequences of getting a normal mortgage and then just letting her live there?

Thank you

OP posts:
alwayswrighty · 13/03/2022 09:19

You probably need a broker, but Natwest will allow a residential mortgage for this scenario. Natwest won't necessarily allow you to do this direct though brokers seem to be allowed different quirks than their own mortgage advisors

If you put your Mum on the mortgage it'll have to be a term to match their max lending age, and it will have to be a lender doing joint borrower, sole proprietor.

alwayswrighty · 13/03/2022 09:20

Should add I don't work for Natwest.

Original poster
44Seahorses · 13/03/2022 09:24

Thanks alwayswrighty. I'll have a look at the Natwest option. I didn't think putting her on the mortgage would be a simple fix 🙄

OP posts:
Ulchabhan · 13/03/2022 09:27

Beware of putting her on the mortgage if she is not contributing as this may give her ownership rights. If she has to go into care in the future the house will be counted as (partially) hers and used to pay for that care.

ChoiceMummy · 13/03/2022 09:55

Also, be aware that if your mum is then named on mortgage and deeds, should she require social care etc, the house will be deemed capital and used to fund this. So future proofing, this may not be the way to go.

user1487194234 · 13/03/2022 10:28

Seek advice from a mortgage broker

ClarasZoo · 13/03/2022 10:31

You will also have to pay the extra 3% stamp duty I think…

OpheliaThrupps · 13/03/2022 11:25

@ClarasZoo

You will also have to pay the extra 3% stamp duty I think…
And capital-gains tax when you sell.
Original poster
44Seahorses · 13/03/2022 14:57

Thanks all, clearly lots to think about. Obviously I will speak to a mortgage broker but it was news to me today that I might need a special mortgage. I'd assumed I could just get a mortgage but let her live there as I won't be making an income from it. Seems it isn't that simple though.

OP posts:
LittleOwl153 · 13/03/2022 15:01

Could you have a by to let mortgage - set her up officially as a tenant. Charge her rent but then give it back to her in some way or use it to pay some of the bills you'd expected her to pay? Maintenance wise for example?

ChicCroissant · 13/03/2022 15:05

If your mother receives any benefits I would look closely at whether they would be affected by owning or renting a property - I know you said she rents at the moment, but renting from a relative would be worth checking. You'll pay tax on the rent that she pays you btw.

NoSquirrels · 13/03/2022 15:05

@LittleOwl153

Could you have a by to let mortgage - set her up officially as a tenant. Charge her rent but then give it back to her in some way or use it to pay some of the bills you'd expected her to pay? Maintenance wise for example?
Most BTL mortgages prohibit close family members as tenants.

OP, you’ll pay the mortgage? Effectively subsidising her rent?

NoSquirrels · 13/03/2022 15:06

Btw, if you’re married then it doesn’t matter that the house you live in is ‘solely in his name’ - it’s a marital asset.

NoSquirrels · 13/03/2022 15:06

@ChicCroissant

If your mother receives any benefits I would look closely at whether they would be affected by owning or renting a property - I know you said she rents at the moment, but renting from a relative would be worth checking. You'll pay tax on the rent that she pays you btw.
It’s also hard to get benefits to pay out on tenancies from family members…
Original poster
44Seahorses · 13/03/2022 15:12

Yes, NoSquirrels the plan is for me to pay the mortgage, easing her financial burden in retirement as she has no assets of her own. I will not be charging her rent.

She doesn't receive any benefits, though, to muddy the water, a relative she effectively cares for and who lives with her is in receipt of disability benefits, if that would make a difference. This relative currently receives housing benefit but would not claim it in the event of living rent free of course

OP posts:
NoSquirrels · 13/03/2022 15:23

What would be the consequences of getting a normal mortgage and then just letting her live there?

To answer this - as long as you pay the mortgage and the bank has no need to enquire further then nothing will happen.

Your mum will be in an insecure position, though, because you cannot officially give her a tenancy agreement so she is 100% dependent on your goodwill and the situation never changing.

Of course she is your mother, so you’re not going to kick her out (this is why banks don’t want to lend on BTL on a close family member, as the guarantee of paying rent is much more precarious!) so you need to properly stress test all sorts of scenarios: what if you can no longer pay the mortgage, and she can’t get benefits? What if you divorce, and that house becomes a marital asset to be divided up? Etc.

Original poster
44Seahorses · 13/03/2022 16:05

Thanks for all the responses.

Obviously there's lots to weigh up and it's not the ideal situation but it's the best we can come up with to give my mum a bit of security. I'm fortunate to be in a relatively comfortable/ secure position, as far as anyone can be, so I'd just like to try to make things a bit easier for her.

I had assumed I could get a mortgage on a place and install her to get on with her life, and that would be quite legal but it seems perhaps not.

My main concern is any legal situation which may arise in terms of the mortgage lender/ insurance etc should they 'find out' I'm not an occupier. I feel uneasy about it now that I know it's not technically above board!

OP posts:
Measureformeasure · 14/03/2022 07:43

You also need to get some advice from a solicitor about the arrangements as the house could be counted as part of her estate when she dies, as she will not be paying rent on it. She needs to consider this in her estate planning. It sounds like an amazing thing to do for you mum though! I hope it works out!

alwayswrighty · 14/03/2022 08:16

@44Seahorses

It can be done, and it is perfectly legal. You just need to consider the following:

  1. Ensure you use a broker who will place your mortgage with a lender who will allow a residential with your Mum in only - it limits your lender choice, but it is possible
  1. Consumer buy to let is possible but you will need to declare any rental income and cannot offset mortgage payments, so option 1 is probably better
  1. If doing option 1 ensure you have life insurance to repay the mortgage in trust to your Mum
  1. Make sure you amend your will to include the property and ensure Mum has a lifetime interest
  1. As you do not currently own property you will not be liable for the stamp duty uplift for second property
alwayswrighty · 14/03/2022 08:17

You also need to get some advice from a solicitor about the arrangements as the house could be counted as part of her estate when she dies

If not in Mums name this is not the case.

Tippexy · 14/03/2022 08:24

5. As you do not currently own property you will not be liable for the stamp duty uplift for second property

Unfortunately, this hasn't been true since a few years ago when they closed that particular loophole. By virtue of being married to someone who does own property, OP will have to pay the second home stamp duty, even though her name has never been near a property deed in her life.

implantreplace · 14/03/2022 08:25

Highly unlikely she would be able to get a mortgage

Speak to broker and explain scenario

implantreplace · 14/03/2022 08:25

[quote alwayswrighty]@44Seahorses

It can be done, and it is perfectly legal. You just need to consider the following:

  1. Ensure you use a broker who will place your mortgage with a lender who will allow a residential with your Mum in only - it limits your lender choice, but it is possible
  1. Consumer buy to let is possible but you will need to declare any rental income and cannot offset mortgage payments, so option 1 is probably better
  1. If doing option 1 ensure you have life insurance to repay the mortgage in trust to your Mum
  1. Make sure you amend your will to include the property and ensure Mum has a lifetime interest
  1. As you do not currently own property you will not be liable for the stamp duty uplift for second property[/quote]
Point 5 is WRONG
implantreplace · 14/03/2022 08:27

I had assumed I could get a mortgage on a place and install her to get on with her life, and that would be quite legal but it seems perhaps not.

Of course it’s “legal” just as long as all parties involved are aware and mortgage reflects situation

implantreplace · 14/03/2022 08:28

And taxes payable reflects situation l