Can our children pay the mortgage to keep the house?

[Manda5]

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?

Thanks all
Lots to think about!

You can’t “gift” a mortgaged house! If the house remains mortgaged in your names, you are responsible for the mortgage payments regardless of who ACTUALLY pays for it.

If you want to transfer ownership of a mortgaged house to your sons - technically, it has to be remortgaged in their names so effectively a sale/purchase and they will have to undergo a credit check on their own merits.

If they are paying rent to yourselves, they are basically your tenants so you are the landlords. You need permission to let from your mortgage provider but you remain the mortgage owner of the house.

If you are proposing that they pay you a board/lodging contribution without a formal tenancy agreement, that’s fine but you still are the legal mortgage owners.

You certainly need to disclose that you own another (mortgaged) property in your names if you apply for a second mortgage on a different property. Non disclosure is mortgage fraud.

You can sell the house cheaply to them if that’s what you want - not sure I would do that in my early 50’s!

What financial help are you thinking of? Obviously, you can charge them minimal rent if your mortgage payment is low - nothing wrong with that, your decision. Yes, it would classify as income and subject to the normal tax allowances and reliefs.

Not an expert on state benefits and housing benefit were you to apply for financial help for yourself (if that’s what you mean) but I’m sure there are plenty on MN who are more knowledgeable.

My parents have proposed something remarkably similar. They are moving away and want me to rent their house. I looked into the implications and there is nothing in it for me, and all to benefit them. Do your sons even want to rent your house or is it an idea you haven't even proposed to them to find your lifestyle?

They will obviously have all our estate one day anyway,

Now would be a good time to inform yourself about what might happen to your estate, when one or other of you becomes old/infirm and needs more help that the spouse can provide. It is a much more pleasant experience to decide what help you need, source and pay for it yourself than to rely on social services to assess and provide help in fifteen minute visits.

Would you have sufficient income to fund this, without using the capital from your house? If not, one scenario that you would need to plan for, is that care costs use up your entire estate. If you have given away your home to children, you may be considered to have intentionally deprived yourselves and so not eligible for local authority support.

On a completely unrelated topic, how 'housetrained' are your two sons? What state would they keep the house in, left to themselves? No reason to suggest that they would not look after it as if it were their own, but it might be good to consider what sanctions you would have, if they lived the stereotypical 'two bachelors who have only ever lived at home' lifestyle?

you cant really prove it credit checks will show you have a mortgage in your name unless you draw up official contracts for rent in which case you wold have to tell the mortgage company anyway

You really need to inform yourself of the consequences of what you want to do. They cannot pay your mortgage or if they do, they are gaining an interest on the house and that could have some repercussions if things were to go wrong.

If they pay you rent, you become a landlord and with that, your arrangements with them becomes a business.

Of course, your sons are reasonable, love you and all and you can't see anything going wrong.... yet it can so easily be so. Say your sons get girlfriends, and they move in. They become sub-tenants. Things go wrong between them, the girlfriend(s) refuses to move out. Your sons can't stand living with them any longer and move out.

In the meantime, your business fail, you end up without a penny to your name, you want to move back in so that you get at least a roof over your head.... except that by then, your house is inhabited by two strangers, who are refusing to move out and don't pay rent. Your sons can't afford to pay rent where they are and to you. You need to go through the process of eviction, which can take many months, even worse if you haven't followed all the proper rules excepted of a LL. Before you know it, you have to employ experts, and it's all costing you a fortune through not fault of yours or your sons.

It doesn't always happen to others.

A more straight-forward approach would be for you to sell the family home, downsize to a smaller house in the country and then gift some of the left over equity to your sons to use as a deposit to buy their own place.

what a simple answer. your sons are adults and it is time to cut the cord, your job is done.

if that means the end of free housing in london, thems the breaks.

What 'NotDavidTennant' said. Sell the house and gift them money for a deposit. You can't really have two houses without having to pay loads of tax.
Circumstances change quickly. Don't make things complicated!

gift some of the left over equity to your sons to use as a deposit to buy their own place.

I'm guessing that way that increases in house prices have outstripped increases in wages, that the DC would not be able to get a mortgage, even with a hefty deposit : the OP reads

They won't afford their own mortgage