To skip the mortgage?

13 replies

suspiciousmums · 27/10/2023 08:19

Good morning,
I’m a complete novice to property and wanted to see if this would be a viable option or not. I currently live in the family home I was brought up in which my mother owns, and she lives with her second husband (my father passed away ten years ago). The home we live in is a large property with enough bedrooms to fit my children with spare rooms. My mother has asked us if we would like to buy the property at a reduced rate (I’m in Scotland if this makes any difference). With all the talks of mortgages and rates going up etc, and the reduced rate my mother has offered us the property for, between me and my partners income we could save the money to pay my mother in ten years or under without causing any financial hardship scrimping and saving etc. However I’m just wondering if it’s better that we take the mortgage option out or not? In my head saving the cash some for ten years means we are not paying interest to the bank etc, and in ten years (hopefully sooner) we would have the lump sum ready for her to pay direct, but I don’t know if there are any benefits to choosing a mortgage? My mother is happy to wait the ten years for the lump sum (she is financially secure, they own the property they live in now so have somewhere to live). Any advice appreciated, thanks

OP posts:

TheFlis · 27/10/2023 08:22

Why pay interest on a mortgage when you could be gaining interest on savings?

Twiglets1 · 27/10/2023 08:27

I think you should talk it over with a solicitor @suspiciousmums & get legal advice as the situation is rather complicated and you need to be sure you’ve thought of all the angles and protected yourself.

PinkRoses1245 · 27/10/2023 08:29

In theory it sounds beneficial as you gain interest on savings. And assume you and partner are happy to live with your mother for 10 years (sounds awful to me). My thought would be does she has a Will? If she doesn’t and she’s married, I think her second husband would inherit everything. Might be worth that conversation otherwise the plan could get tricky

AgentProvocateur · 27/10/2023 08:30

You would need to get a legal contract drawn up. Anything could happen in the next 10 years - your mum might need care or pass away (I hope not, but worst case scenario). Otherwise, saving would definitely be better than paying a mortgage.

LimeCheesecake · 27/10/2023 08:37

On the face of it, perfect - but there is risks- sadly based round your mothers health.

if she needs care, would then selling the house to you at a vastly reduced price he deprivation of assets? Particularly if house prices have risen so in 10 years the amount you’ve agreed is no where near what the house is worth then?

what if she dies? Would your step dad inherit the house? What about inheritance tax?

if in the next ten years your mum and step dad divorce, where would that leave you?

who would be liable for repairs etc. if you die, would she still allow your dh to buy it on same deal? What if you want to move? If you own it you can sell it to buy something else, if not you are still waiting the 10 years.

I think I would buy it now, but that’s because I like security of knowing where I stand, even if it costs me a bit more.

But a lot would depend on your mums health, her relationship with her husband and your relationship with your step dad.

catbla2957 · 27/10/2023 08:38

Surely it depends if your mum wants the lump sum now or in ten years. You could get a mortgage and overpay to reduce interest . And how old are your kids. Will they benefit more now or in ten years

FallingAutumnLeaf · 27/10/2023 08:55

How much more might the house be worth in 10 years?
I'd be tempted to save hard for 2-3 years, put down a 30% deposit, and take out a short mortgage for the rest.
In terms of possible care fees and inheritance the sooner the better.

Iwasafool · 27/10/2023 08:57

Is your mother happy to wait ten years? If she's planning something with the money now she might have a view on it.

Trickytimer · 27/10/2023 09:14

The OP says her mother is willing to wait ten years for the lump sum

BoohooWoohoo · 27/10/2023 09:20

You need to discuss different scenarios like what happens to her house if she passes away? It's very common for the spouse to be allowed to live in the house until they die which could be decades. Also what happens if she needs a care home. Her house could be sold to pay the fees.

LovelyGreenCushions · 27/10/2023 09:26

Are you an only child?
Inheritance laws differ in Scotland from England

Changeinschoolperhaps · 27/10/2023 09:32

Could you set up a private mortgage / loan with your mum at 0% interest.
We’ve had family members do this.
The amount you pay each month is what you were planning to save.
I think you’d need this legally set up but it means the ownership would be sorted now.
you’d need to think about different scenarios. Eg. If your mother died would the mortgage be cancelled or would you pay her husband.
I would take legal advice… it will save you long term on the interest payments.

LovelyGreenCushions · 27/10/2023 09:56

Are you sure that it is hers to dispose of and her husband doesnt have a claim?

Flip