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Original poster

Can our children pay the mortgage to keep the house?

36 replies

Manda5 · 28/04/2018 22:52

My husband and I are considering a lifestyle change. We've had enough of the rat-race and want to think about moving to the countryside or even leasing to have family run business.
We're a few years from retirement age (early 50s).

My question is; we have a three bedroom house and two grown up sons who don't want to move away: Can they keep the family home and pay the mortgage? They won't afford their own mortgage so could this be a win-win?

OP posts:
AjasLipstick · 28/04/2018 22:59

www.saga.co.uk/magazine/money/personal-finance/giving/what-you-need-to-know-about-signing-property-over-to-your-children

This is a good article

The question is this...what if you and your husband suffer ill-health? Where will you live if you can't run your own business or work to pay rent?

Original poster
Manda5 · 28/04/2018 23:05

Not sure we're thinking about gifting it to them. We want to keep it as a family owned home

OP posts:
TyrionsNextWife · 28/04/2018 23:10

You could rent it them, and that way they’re covering the mortgage and bills but it’s still your house.

AjasLipstick · 28/04/2018 23:11

Well OP it can get tricky....if you're thinking of simply moving out and letting them cover the mortgage, it all looks good right now but what if one of them meets a partner who gets pregnant and moves in?

What if you change your mind but they've invested in your house over a few years? They wouldn't have a leg to stand on...really they should be working towards buying their own property....saving for a deposit etc.

Original poster
Manda5 · 28/04/2018 23:11

How about if they rent it off us? Are we unlikely to get financial help if; on paper; we have to meet the mortgage costs?

OP posts:
Byebyebye · 28/04/2018 23:12

Nothing wrong with charging them rent. Taking over your mortgage payments with no return for them is, in my opinion, out of order.

Chinesecrested · 28/04/2018 23:12

They could just live there in a house which remains yours but with them paying the mortgage and other expenses. So long as the mortgage payments are made, the mortgagee won't care who pays. You'd have to notify the insurance company though.

Original poster
Manda5 · 28/04/2018 23:16

Ok. So, where we live rents are excessive. What we pay on our mortgage each month probably wouldn't get them a 1 bed flat!
I was thinking that the state will be theirs one day anyway but this gives them a home to live in; pay the rent for, which in turn covers the mortgage?

OP posts:
AjasLipstick · 28/04/2018 23:17

That sounds sensible but the only thing I would have faint misgivings about is that they will get comfortable there and if one of them meets a partner, then wants them to move in, things will get tricky so I would make it clear that this can't happen.

Original poster
Manda5 · 28/04/2018 23:19

Thanks. Is this something we have to make official? Do we need papers drawn up etc? Who would we go to?

OP posts:
imnottoofussed · 28/04/2018 23:21

What do you mean about you getting financial help?

GreyGardens88 · 28/04/2018 23:23

Surely it's not an arrangement that can last more than a few years anyway? If they both p ay directly to the mortgage they will both have rights to equity in the property

Original poster
Manda5 · 28/04/2018 23:23

Ie; if we are going to move away; we will either need to buy, rent or lease somewhere else. So; how do we prove or demonstrate that we aren't already paying a mortgage?

OP posts:
delilahbucket · 28/04/2018 23:23

If you rent it to them you will have to draw up a formal agreement, inform your mortgage provider and your house insurance company. Failure to do any of these can have terrible consequences.

helterskelter99 · 28/04/2018 23:24

Could they rent the house in the new place ?

shouldwestayorshouldwego · 28/04/2018 23:26

Could you get a valuation and split the house three ways? You own the proportion of the house which is the equity and the proportion which is mortgaged they own between them and they get a mortgage between them. If their circumstances change then they would need to renegotiate ownership of their share between them. You would need to see someone who deals with conveyancing.

sobeyondthehills · 28/04/2018 23:27

I rent my house from a family member, they have landlords insurance and we have a formal agreement. However they own the house free and clear, so you would have to check with your mortgage whether they will allow you do this

AjasLipstick · 28/04/2018 23:28

Helter Why would they rent the house in the new place? Confused OP and her dh want a new start...a change. They also want to keep their house.

OP....go to see a solicitor and discuss this. They'll help you with the paperwork.

My concern is that GreyGardens is saying something you need to think about...

NeverTwerkNaked · 28/04/2018 23:30

You’d have to be honest that you do have a mortgage but it’s being paid by your sons.

NeverTwerkNaked · 28/04/2018 23:31

Agree you need to see a solicitor understand all the different implications of different arrangements.
Including you would pay SDLT at “second home” rate if you were to buy somewhere else

NeverTwerkNaked · 28/04/2018 23:32

(and there could be future CGT issues)

So in brief: it’s complex and worth paying for advice before progressing too far with your plans.

Bigpizzalover · 28/04/2018 23:36

You need a consent to let/permission to let form from your current mortgage provider, this also means with most providers however you won’t be able to make any changes to your mortgage whilst it’s let such as rates or further borrowing.

Your child may also have to sign a document to state they have no overriding interest in the property if they are over the age of 17.

Original poster
Manda5 · 28/04/2018 23:37

Thank you. I think we're just trying to establish what our options are.
We don't want to see our children homeless or renting something inadequate just because,we want a fresh start. They will obviously have all our estate one day anyway, and this way they can keep the family home until they're ready to do something different. Later, if we are successful somewhere else and they have moved on or out we could either sell the house or rent it out.
I think maybe there are two things here:

  1. keeping the house for some security for both them in the long term (the estate), and for us if they move out or we return
  2. Ensuring we are not seen as having to already pay a mortgage if we need to pay out for our new lifestyle
OP posts:
MargaretCavendish · 28/04/2018 23:46

I was thinking that the state will be theirs one day

You really can't assume it will - if one or both of you end up needing long-term care you can get through the money shockingly quickly. I would think carefully about what you'd think was fair if they didn't end up inheriting the house, and proceeding on that scenario.

Effic · 28/04/2018 23:46

They aren’t paying the mortgage, they are paying you rent. Which is income and therefore taxable. And if the house burns down and the insurance company finds out you’ve been collecting rent, your insurance won’t be valid. This is why landlord insurance exists.
Where were you thinking of living? Because if you are buying another house, it’s a second home and you will need to pay the higher rate of stamp duty. And get a second mortgage so your income needs to be high enough to do that.

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