Any legal types about, I need some advice please. A family member has offered to buy our house, it is not up for sale, we don't know what to do.

[shouldweshouldntwe]

To cut a long story short, as of the end of this month DH will be out of a job, both of us have been applying for any jobs left right and centre to tide us over.

We own our house, it has a relitively small mortgage, however we only have enough savings to last us a couple of months with regards to paying the mortgage and bills.

When I was at mums a couple of weeks ago and my cousin was there we were all chatting about the whole economic thing going on at the mo. I said, not thinking about what I was saying, that I would just like to sell our house as we are not gonna be able to afford it if neither DH or I get a job soon.

I never thought any more of it, until yesterday when my cousin cam round to see me, and said that she would like to buy our house for the market value if I am really interested in selling. She wants o rent it out and said that we could have first refusal as her tennants.

I was shocked and a bit taken a back, but I promised I would at least talk to DH about it, thinking that DH would say no way. But to my suprise DH thinks it is a great idea. We get to stay in this house but can apply for housing benefits.

I am not sure but TBH I would rather sell it that have it repossesed. The only thing I am wondering is basically can we do it. Can we rent the house that we originaly bought.

Any advice would be welcome.
Also can anyone offer advice on what you would do in this situation please.

swsw - i can't see why not in fact there are companies that do just this, buy houses off of people and then rent them back to them. I'd say you need to talk to a solicitor and get a couple of estate agents round to value the place.

The only thing would be that surely you would end up with a reasonable amount of equity from the house, you say you only have a small mortgage, not sure how benefits work but won't that count against you?

Firstly your mortgage lender may be able to help defer payments for a few months or change to another mortgage scheme. Have you thought of contacting them? Get a plan together before you do and see what options are open to you. I don't think you should jump into anything with your cousin. It will be hard to get back into the housing market when properties all start rising in value again.

You need to check the situation re HB . As it is a family member you may have to show that it is more than a ruse to be able to claim. Otherwise there is nothing to stop you selling if she can finance it but you need to get a solictor to do the paperwork.

Thanks, these are the things we need to look into. Eqity from the house would probably count against us WRT housing benefit. I really don't want to sell my house, it was just an off the cuff remark on my part. I love my house, it is not much but it is mine and DH's, it is DD's home.

I don't mind renting if we end up needing to, but I want to hold on to my house as long as we can. I think DH is just worried. His work letting him go, us with only a little bit of savings and the economy the way it is now, it is so worrying.

could you cousin possibly buy out the remaining part of the mortgage and have that as a percentage share on the house and you pay her a small amount of rent for that part, then once you back in work you can remortgage and pay her back.

You won't get housing benefit because of the equity that would be released.

Any savings over £6,000 reduce your claim to housing benefit considerably so you may end up selling your major asset then using all the money just to live.

If there is any other way round it then I would try that first, eg. Do you have mortgage protection insurance? or will your mortgage company allow you to go to interest only for a few months or allow you a payment holiday and see if your DH can get any kind of work to keep you going.

You can apply for help with housing costs when you have a mortgage and find yourself with no income. There is a 39 week wait before the benefits kick in and they will only cover the interest element of your mortgage, not any capital repayments. Many lenders accept this and will allow a repayment holiday until the benefits are paid. You need to put in your application as soon as dh is made redundant and you need to contact your lender to make them aware of the situation.

I honestly wouldn't go with your cousin's scheme. The equity released from the sale would exclude you from benefits, you would have to use the equity to live on and then (once you have used up so much of your savings that you fall within the eligible band again) show the benefits agency that you did not dispose of the capital specifically to qualify for benefits. You would also have to undergo an investigation into the relationship between you and your cousin (local authorities look at landlord/tenant relationships between relatives very closely). Later on, when the economy has recovered, you will find it very difficult, if not impossible, to buy back into the market as you may have used all your current equity to live on.

We do have mortgage protection insurance, I forgot about that, I am on the phoe to them now to see if ww can claim.

I would speak with the mortgage lender first to be honest, especially as you have a lot of equity in your house. Your cousin is not doing this to help you out, she sees a way of making money out of you. She gets to own a house, she has a steady income on it, possibly in line with her own mortgage costs on it which may in fact be higher than your own due to your high equity in the property. She will then get to sell the house, with a profit when the market recovers. Most likely not back to you, as you wont afford it by then.

Can you change to an interest only mortgage for the time being to give you some breathing space?

I would be very reluctant to start a 'business' arrangement with a family member.

However, it does seem that your cousin is being very generous, as she could go and buy any property and let it out, it she was purely looking at the financial side. The companies who make this offer only give you something like 60% of the market value, although you don't have to pay rent.Hope things get sorted out soon for you.

The more an more I think about it I don't want to sell, there is no point at the moment, selling is a lsat resort.

DH is only on a temporary contract with his work, they gave him an assurance that after the scholl holidays (he works at the local college) that he would be kept on so I didn't go back to work after having DD. They then said a couple of weeks ago that they will not be keeping him on. And my work didn't have to take me back as it was a month after my mat leave had finished.

I have spoken to the mortgage protector insurance people and they have said that a claim will most likely go through if we were to claim. They are sending the papers out now, I suppose the worst they can say is no.

My mum has been on the phone just now and has offered to lend us the money to keep paying everything should we need it.

Hopefully one of us will get a job soon.

DH went for an interview yesterday so hopefully.....I don't want to jinx it.....but hopefully

"There are companies that do just this, buy houses off of people and then rent them back to them"

Infact there are around 2000 such companies who do this - it is also a field that is completely UNREGULATED and customers are not fully informed of the risks of doing such a thing. Some people have had their houses repossessed by these very companies, this will keep happening.

Would not touch your cousin's offer with a long pole; its far too risky and you could end up potentially being repossessed. Talk to your mortgage lender instead and work out something with them.

I would like to add to this:

A WARNING ABOUT SALE AND RENT BACK SCHEMES

Just to add - I'm sure I read/heard recently that the amount of time you need to be on IS is being/has been reduced to 13 weeks before you can get help with the interest on the mortgage

HB is ruled out if you owned the house withing the last 5 years so you couldnt claim that - its would also be seen as a contrived tenancy as you will be the first "tennants" of a family member.

Yes, FAQ, I also read the same thing - although don't know where unfortunately. Now able to claim IS after only 13 weeks - big change.

The waiting time for claiming the Mortgage Interest from Income support will reduce to 13 weeks from April 2009. It will also increase from interest payments on mortgages up to £100,000 to up to £175,000 from the same date.

Your dh isn't actually out of work yet and as you've been applying for loads of jobs something may come up in the mean time. And, as you say, you've a little bit to survive on for a while AND your mortgage isn't big - so why would you want to sell now?

Wait and see what happens, if you or dh get a job you don't need to worry.
And you have morgage protection.

You definitely do not need to think about selling.

Anyway, I didn't think you could claim HB if you were renting from a member of your family.