Buying Parents House - Concessionary Purchase or Transfer of Equity? Under_the_Radar

#1
Hi, not sure which option would be best for me.



My situation is, I live in a property with my fiancee and my 2 parents. The house is in my mum's name only. She has an interest only mortgage that needs repaying in the summer of 2018. She owes 187k on a property worth approx 650k. She doesn't want to move if she doesn't have to and equity release is the last realistic option I think.



I've spoken to one advisor who has recommended I buy the property as a concessionary purchase for 187k although I'm aware that leaves my mum in a situation where she won't be able to claim any benefits should she need them, and it might not be possible for her to officially reside at the property - although on that last note I believe some lenders will now allow this to happen, I think Natwest being one?



The other option that was suggested to me by a friend who has done similar is for my mum to sell me a share of the house with which I take out a mortgage on the house and pay off her existing mortgage. I've spoken to someone at Barclays who says this is doable, however I can't understand this process. Would the transfer of equity have to be done prior to the mortgage application? i.e. with my mum's current lender and then I would approach Barclays for the mortgage.



The second option (transfer of equity) seems best as it will safeguard my parents in any future scenario, but I'm a little confused how I would go through the process of doing it and if it is even as viable as Barclays have said. Has anyone any experience or knowledge?



My Mum and Dad are 69 and 73 respectively, Barclays have said they wouldn't take their age or finances into consideration when lending me the money.



Could this be a good option, or is my only realistic one a concessionary purchase?



Thanks.



*originally posted in house buying section but possibly more suitable here..

#2
Bear in mind that your mum's life expectancy is around 25 years. A lot can happen during that time, and it's an awfully long time for you to be paying her mortgage.



In particular, you have a very, very accommodating fiancee if she is happily contemplating living the first 25 years of her married life with her parents in law.



Are you quite sure that your mum wouldn't be better off down-sizing and paying off the mortgage that way?

#3
Ideally, yes that would work out very well for her. However she doesn't want to move and would rather take out an equity release deal than move out of the area.



Unfortunately, we do not have much other choice. I have no other family, so the older they get the more reliant they are on me, and my fiancee is too ill to work, however not ill enough to meet any criteria to receive benefits so we are living solely on my income. The alternative to us living in a decent sized house near to where I work would be to rent somewhere further out, for a considerable amount of my wage, for less space and probably more money than a 187k mortgage, and probably never have another chance to purchase a property until my parents are dead and the house is sold. Its not a situation I like but unfortunately thats where I am.



I should have probably mentioned above the property has an annexe in which we reside, which is the size of a fairly decent 1 bed apartment. If we ever have kids we could potentially move one of my parents into the annex and switch sides, so its not as bad a situation as it probably sounds.

#4
Yes, annexe, that sounds an awful lot better!



An equity release roll-up mortgage could mean that there's not much left over when you inherit the house, unfortunately. So, buying a 30% share may be the best option.

#5
Thanks, yeah its not the best option, although I believe you can get deals now where you can pay off the interest to stop it compounding. Still not the best option though!



Only reason I posted on here was to gauge how easy it is to buy a share of the house, the mortgage company we are with will not allow a remortgage, and it seems strange to me that I can somehow buy a share of it through Barclays, not being the lender we're with at the moment. Was hoping to find someone on here that either knew how it works, or had recently done the same thing.

#6
Hi under the radar, has your mum spoken to the existing lender? Sometimes, depending who the lender is, they will negotiate on how the interest only mortgage will be repaid- some lenders have a special team just for this. Unfortunately this scenario isn't that uncommon you see. The first option they will tend to explore is extending the term and transferring it to repayment, they can have the scope to extend the term to a higher age than you would expect for a normal mortgage application. They my even agree to keep the mortgage on interest only- it is all worth discussing with them

#7



Hi under the radar, has your mum spoken to the existing lender? Sometimes, depending who the lender is, they will negotiate on how the interest only mortgage will be repaid- some lenders have a special team just for this. Unfortunately this scenario isn't that uncommon you see. The first option they will tend to explore is extending the term and transferring it to repayment, they can have the scope to extend the term to a higher age than you would expect for a normal mortgage application. They my even agree to keep the mortgage on interest only- it is all worth discussing with them
Originally posted by Xyzzy


Yeah we've already been down that route, the lender is not taking on any new mortgage applications, they won't extend it, or allow me to remortgage it and pay it off. Not because of my credit or anything, simply because they aren't interested in remortgaging it. Thanks anyway though.

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