Sharing a home with a child

[tea42]

I cannot believe the can of worms that I have opened.

My wife broke her back and at the same time developed dementia. So, we decided to accept our daughters offer of care as we age ( now mid 70s) and buy a house together, with us contributing half and her and her husband (mid 40s) contributing the other half with 1/3 of their contribution from savings and 2/3 mortgage to be paid by them. The mortgage represents only about 1/3 of the total value of the property. Because they are musicians their mortgage was not easy to arrange and the offer specifies that they must have total title even though they are only paying half?
They travel frequently.
So, if they died in a crash, we would presumably get chucked out by the lender. If one of them died or they divorced and wanted to move on how would that leave us? Their mortgage is for 20 years so we cant really be named on it? They have a totally disabled, esn, deaf son who would be totally incapable of dealing with anything like this. If we died within 7 years HMRC would appear wanting to claim 40% tax on our gift. Lots of other undesirable scenarios...

Thing is about this, this must be a very common scenario, how should this situation be handled legally? What do we need to do to provide everyone with security?

[staffordian]

I believe the requirement for your daughter and her husband to have sole title is standard, because the names on the mortgage normally have to match those on the title.

One way round the problem might be for your daughter and her husband to take out life cover to match the outstanding mortgage balance (decreasing term is cheap) which will mean there is no need for the lender to repossess in the event of their deaths, as there would be funds to settle the loan.

And suitably drafted wills would protect you right to remain in the property, or to inherit it, whichever is most appropriate.

Not sure about the divorce scenario, I'm sure a solicitor could give useful advice here.

[Urbandreamer]

Thing is about this, this must be a very common scenario, how should this situation be handled legally? What do we need to do to provide everyone with security?

I don't think that it is that common at all.

However, if we accept that I may be right, the first thing to recognise and accept is that you may need profesional advice. Given your age you may be happy to know that this is done in the way that we use to organise car insurance. You approach a broker and he is usually paid through commision.

It's 15 years since we arranged a mortgage, it's paid off, but it was a complicated "one". In fact it was three mortgages on the same property with different due dates and interest rates!

Now as to security, understand that nobody can dictate the future. Hence we are talking bets. Mortgage companies bet upon people to be able to repay and accept that they will take a haircut (may recieve less than they lend if the buyer can't pay, even if they get the house). The "owner" bets that they can pay the premium (monthly costs) and may have a debt for life, unless they become bancrupt.

Once you accept that point it's not a case of "security", but of likely outcomes and statistics, given your objective.

That said, why do you "want" to buy a house for yourselves. I seriously doubt at this point it is to raise your children in. Would not renting work? It's actually not that much more expensive.

OK, there are IHT tax reasons to convert any spare money that you have into a house, but should you really let the tax tail wag the dog? Especially if it's quite so difficult and expensive to do?

Ps, Sole title is "standard", but not required in ALL cases. You just are going to have to find a "non standard" lender, hence use a broker.

[melonfool]

we decided to accept our daughters offer of care as we age ( now mid 70s) and buy a house together, with us contributing half and her and her husband (mid 40s) contributing the other half with 1/3 of their contribution from savings and 2/3 mortgage to be paid by them. The mortgage represents only about 1/3 of the total value of the property. Because they are musicians their mortgage was not easy to arrange and the offer specifies that they must have total title even though they are only paying half?

I did something like this with my ex - I paid for my half of the house, he paid about 1/3rd of his half in cash and the rest was by mortgage.

We *both* had to be on the mortgage, so that we could both be on the title.

In law, I was jointly and severally liable for the mortgage, in real life, he paid it. We then had a deed of trust drawn up saying he would always pay it, and who owned what if we split.

Had he stopped paying I am aware that the law regarding the debt would take precedence and I would have had to pay the mortgage.

Anyway - yes, it is the norm that only people on the mortgage can be on the title so the mortgage co are not having their asset diluted and can come after the other owners if the payments stop.

Can you all apply for the mortgage together? I think Nationwide now do friends and family mortgages.

The alternative is that you buy the house and they live in it with you, paying some rent?

Mel