Can I protect my share of a home with a lifetime mortgage?

[SnugTiger]

My DH and I have a lifetime mortgage on our property. I would like to have a Will drawn up giving him the right to live in the property until his death and then my share of the property (50% of whatever is left after the life time mortgage is paid back) to go to my child. We both have children from previous relationships. I have been told that because the lifetime mortgage is already in place it's not possible to do a Trust Will. Is there anything I can do to protect my share for my child if I die first?

I don't think (not an expert in lifetime mortgages) that you need to specify he can stay there until his death because he can do that anyway under the terms of the mortgage. You certainly can't put the house into a trust because the lifetime mortgage provider will already have a call on it. Are you tenants in common or joint tenants?

Tenants in common

I tnink you need to find out, from the provider, what happens to your joint lifetime mortgage when the first person dies and how you can leave your share of the house in your will. looking quickly online it seems to vary a bit from provider to provider. Have you spoken to them?

"I have been told that because the lifetime mortgage is already in place it's not possible to do a Trust Will."

Can I ask who said that? That doesn't sound right at all - especially as you already own the property as tenants in common.

My own parents are in a similar situation to you. They took out a lifetime mortgage with Legal & General in 2021.

I am aware that some lenders want people to go back to being joint tenants rather than tenants in common before they give the loan. But since you are tenants in common and you have a loan, then clearly your lender is not one of those companies that insist on that.

Each lender varies as to what happens where a couple owns a property as tenants in common and one of them dies. For example, Legal & General say that they may stop any further drawdowns after that point (so you can't increase the mortgage after that point).

But, other than that, there is no difference between people who own as joint tenants or those who own as tenants in common.

.

"...it's not possible to do a Trust Will"

There are different types of trust that can be used for different purposes. It may be that the person you spoke to was thinking of another type of trust. But there is nothing to stop you writing your will in the way that you said that you want.

It very much is possible to have a will that leaves your 50% of the house to your children. As tenants in common you can leave your 50% to whoever you like.

Having a lifetime mortgage makes no difference to that.

You don't even have to leave it in trust, you can just leave it directly to your children and, assuming that they're over the age of 18 when you die, then your share of the house passes directly to them in your will.

OK, so where does the trust come in? You may be asking.

Well, if you leave your share of the house to your children, this means that they own 50% of the house and your surviving DH owns the other 50%.

They can then get a court order to force the sale of the house and turn your DH out (or vice versa if you're the surviving spouse).

The reason for putting the house in trust is that the trust stops this from happening. It says that the surviving spouse has the right to continue living in the house until his death (or other event mentioned in the will eg remarriage). This stops them being kicked out of the house by the children.

The trust doesn't get set up now, it comes into existence on your death. It is generally referred to as an 'Immediate Post-Death Interest Trust'. The terms of the trust are written in your will and this only comes into effect once you are dead.

So, you certainly can leave your share of the house to your children, with or without a trust. The trust is just there to protect the surviving spouse from being kicked out.

The policy is with Aviva. I have spoken to them and emailed. They have said it can't be left to my child in a Trust. I will try to attach the email

OP I think you may have asked the wrong question....not "can I do it using a trust" but "how can i do it?"

So this is what the email from Aviva says (I can't seem to attach)
Aviva wouldn't be able to agree to an amendment to the proprietorship/title owner of the property. The legal title must remain with the borrowers. Removing a late customers name from the title is acceptable to Aviva but we couldn't allow a "non-borrower" to be added or named to the property title. The reason being is that non-borrowers, trustees or other 3rd parties are not party to the mortgage/contract and this could have an impact on our ability to take action under the terms and conditions.

I think that the person who wrote that may be getting things a little mixed up. If you wanted to increase the mortgage after the first death then what they say is correct. But this does not apply to the existing mortgage.

It may help to clear up the issue if you write to them and ask something like this:

Dear Aviva,

We have a lifetime mortgage from yourself on a property owned on a tenancy in common basis.

I understand that, in this situation, your policy is that when one of the borrowers has died then there cannot be any further borrowing.

But that this does not apply to releases from the cash reserve. The surviving borrower can continue to draw from the reserve until the reserve has been used up.

Will you please let me know what other, if any, issues there would be following the death of one of the borrowers who are tenants in common. We would not look to increase the mortgage after the first death.

Regards

SnugTiger

Hopefully, an answer to this question will sort things out.

Thanks I will try that. To be clear we do not have a "draw down" facility. We took the whole amount at the time to pay off our existing mortgage. I will update when I get a response from them but they normally take quite a while to respond

i wonder if a time limit on the length of time the partner gets to stay in the house might be helpful.

im speaking as a child whose parent died and im waiting for the partner to downsize from the family three bedroom house so i can get my inheritance. they had a tenants in common arrangement.

its roughly a decade.

i dont mean to be nasty but if a sensible “five years and then the house needs sold and the money split” policy was put in place, the partner would have been forced to move to a more sensible property to suit their needs. At present one of the bedrooms isn’t even used as it’s upstairs. stairs are not possible for the partner nowadays as a zimmer frame is required. It has a large garden and costs a lot to heat due to the open plan rooms.

i dont even know if the property is being maintained due to the occupant being retired and not having much money. Gardeners alone must cost a fortune.

They have the right to stay there til they “no longer want the property” ie they choose to move in with family, die, move to a care home, downsize etc. They are pushing 90 and intend staying there until they die.

so if it were me id put a time limit on the stay.
no 90 year old living downstairs only is well served by a large up and down stairs house in the middle of nowhere with no shop or bus they can get to but determined it’s too much hassle to move. It’s not. You’d be happier in a smaller warmer facility with company - the one where your friends are would be ideal, with it’s social events and bowling green.

i know i sound like a greedy bitch but it’s the only money my dad left me and a decade on with my own ill health i still cannot get it and it doesn’t really suit the occupants needs either so we are both stuck.

I understand that. The agreement was between Aviva and two named people/entities. Because of the special kind of remortgage this is, they will allow removal of a deceased borrower from the agreement but if they allowed the addition of a new person or entity (trusteeship) then the new person could argue that they did not agree to some or all of the terms and conditions and were not consulted when the agreement was made or that on your death, they agreed under duress because it was the only way to access their inheritance.
I had a young work colleague who was in a slightly similar situation. It was years before HMO's and 4 of them wanted to buy a house between them. Mortgage companies were happy to give them a mortgage but they all said that if any of the group left the mortgage for any reason, then the mortgage would become repayable and a new agreement would need to be sought.

My only suggestion would be to pay for specialist advice from a property lawyer but it will cost you and the advice you might get is that there is not a way around it unless the mortgage could be paid off on your death by selling the house and then income could be split as you wish.