MIL property purchase query

[Fluffyfluffs]

My mil currently lives over an hour away from us and wants to move nearer as her mother passed away a year ago and she’s now alone.

House prices where we live are a slightly higher compared to where she lives. She’s not yet claiming state pension and is relying on a small income from a private pension and savings so she can’t get a mortgage.

When her house sells, along with savings and a small inheritance, she should have around £150,000 to buy a house outright and should have enough to cover her fees etc. She could get a house around here for that but it would need work or would be in a less desirable area, or it would be a flat and then she would have to pay high service charges which is not ideal on a low income.

So.. we have some savings and could help mil out with the difference should she need it.

My question is, how would we protect what we’ve contributed to her new home. Say for example she needs future care or in the unlikely event she remarries how could we protect the money we put towards it. Could DH and MIL buy the house as tenants in common or would that cause issues as we already have our own mortgaged home? Is there a charge we could put on the property etc??

Hope you can help!

Thankyou ☺️

Put the property in joint names under TinC but remember there may be CGT to pay on sale.

Alternatively take the risk it gets swallowed up by care home fees or left to someone else in her will.

@Fluffyfluffs have you looked into doing a private mortgage/loan which you register as a charge against the property? Repayable when property is sold and you could build in interest so it’s like a long term savings plan.

You and MIL would each need independent legal advice on pros and cons.

If you are added on mortgage then there will be stamp duty to pay as counted as a second home. Could you not just let her borrow some from you and she repay you when she gets her state pension.

@caringcarer I’m saying the op loans the money secured against the property I.e. a mortgage. Not that the op goes on the mortgage.

How old is she ? Can she work and get a small mortgage?

Thank you for your replies.

She can claim her state pension from next March. She retired early during covid due to ill health. Her mental health isn’t the best so I don’t think working is an option. We just want her nearby so she has company and can see us and the kids more often. We’ll do whatever we can to facilitate that but it’s hard to work out what the best way to help her is.

I'd investigate the charge on the property option. This means you're not an owner but your contribution has first charge on the property when it's sold - and you can set this up as a proportion of the cost so you also realise a share of any increase in the value. This can worry some mortgage companies but luckily you don't have to think about that in this situation. Definitely get the advice of a good competent property solicitor.

The simplest option would be for you to lend MIL the money, with a legal document to state the terms of repayment (instalments from x date once she gets her pension? on sale of the property? at any point you request it but no sooner than 5 years?) and have the solicitor register a charge on the property with the land registry so it can't be sold without your loan being repaid.

A conveyancing solicitor will be able to do this.