Mortgage advise - buying home for a parent

[meadowkoa]

Hi all,

I wondered if anybody has been in the same situation or is savvy with mortgages.

Me and my partner bought our home around 3 years ago so already have a mortgage. Recently my mum (64) has been given notice on her rental property and with the market being as it is can’t afford to rent anywhere else. Me and my partner are in a position to put a 10% deposit down on a property for her - which she can contribute to however, we’ve seen for a buy to let mortgage you’d need 25% of the house value.

Due to my mums age it is unlikely she’d get a mortgage. Has anyone been in a similar situation or know a way around it?

thank you in advance x

My experience is that this is extremely difficult.

If you want to do as “buy to let” as you say, you need more than 20%. They often don’t allow you to rent to relatives, because they know you won’t evict them.

We solved the problem by mortgaging as if it were a holiday home, but as the resident my mum had to be on the mortgage, and we had to calculate the affordability as if we were paying all the bills on the flat as well. We were limited by term, as they wouldn’t go past my mum’s 75th birthday.

It is possible, but it’s tough.

Who is going to pay the repayments? Do you own the whole flat or does your mum own some? I think you still have some figuring out to do.

It sounds a lovely idea but potentially problematic~

1. It will be your second property and CGT will be payable on sale
2. If you need a bigger home because of children or a job relocation to a more expensive area your mortgage capacity will be affected so you may not be able to rehouse because you cannot get a bigger mortgage
3. If you buy the house with your partner he could ask for it to be sold if you split up. If it isn't sold neither of you may be able to rehouse yourselves because the mortgage on your mother's property would be taken into account when looking at your mortgage capacity as single people
4. If your mother pays you rent you would have legal obligations as her landlord and you would need to pay income tax on the rent paid
5. You need more than a ten per cent deposit for a buy to let mortgage. Not telling the mortgage company that you plan to rent out the property to your mother would be mortgage fraud
6. Your mum could meet a new partner and then if she passes away you may be stuck housing her partner
7. If your mum could not pay her rent would you be able to pay the mortgage on her property?

If your mother is over 60 could she apply for council or housing association property for the over 55s?

If your mum has been give a section 21 notice she should not leave until she gets an eviction notice if the LA or a HA say they can put her on a housing list.

If your finances are OK and your mother is reliable, could you stand as private guarantor for her so she could rent another property?

We bought a home for my mum in a similar situation but she doesn’t pay us rent so we just bought it under a mortgage for ‘buying a property for a relative’. She gifted us a small amount initially that we put down as a deposit and we took out a mortgage for the rest and pay the monthly mortgage costs.

Thank you @Powderblue1, was this the first property you bought? Is she the person on the mortgage or yourself and did you need a bigger deposit?

Sounds like a very similar situation and I don’t know where to turn. I’m going to speak to a mortgage advisor this week x

You say your mum can't afford to rent somewhere else, have you looked into housing benefit? and/or pension credit or universal credit if she's not pension age yet.

@meadowkoano this was secondary to our residential mortgage and a buy to let. I don’t think we needed a bigger deposit than normal but my mum put down her £50k equity and we took out the mortgage in our names only and we pay the mortgage payments each month.