I need a rant - Mortgage based fun or not

unicornrider

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So after getting myself straight, going from a sub 500 Experian to 993 score. Decent job, me and my mum after suffering the horrendous reality of looking after her parents, the social care (or not system) etc and Mum's suffering health from saving the governement thousands by caring for her parents, we decided it was a fab idea that we don't make the mistakes that they did that we would combine finances and buy a house big enough for both of us, so that in the future my inheritance was safe and I would finally be able to own a home and that Mum had someone to look after her etc. Long story short, I have been approved for 130k mortgage, she has sold her house for £180k. We are renting together (well I am paying it all as we thought that was best to protect her deposit) and in the area I live in that is a healthy budget for a 3 bed bungalow.
So we started to look at houses and we went on Friday to the local highly recommended Mortgage broker as we were aware our situation is a bit off piste so the banks don't want to get involved. He was very good but he dropped a few bombshells
1 - Mum has to be on the mortgage even though I am paying and it is based on my income as she is living there. She is 68.
2 - She cannot use her deposit even as a 'gift' so I can get the house as she is living in it so
benefiting from the gift. Even if we could afford to defer her moving in, if at some point she needed social care then it would come up and we would lose the house to pay for her care. So they won't let us proceed on that route as I would be homeless.
Its complete bollocks, I am so upset, I didn't ask to be single at 37 and renting and this seemed a perfect solution, I can care for Mum and we can have a lovely home together. In reality we probably won't need to put her in a home but we cannot get finance for it at all.
The only real option that has come up is Mum gets lifetime mortgage (equity release by another name) however I can't live with her from the start and have to ask permission to do so, then at the end I get nothing, so homeless again. She could choose the roll up option and not charge me rent or pay off the mortgage on the house so I can save for a deposit which would mean getting a mortgage at 40 plus for me and having to live in that for so long so that I can then rent it out and at least have a home when Mum goes. But it all seems so unfair why we can't just combine our finances.
Sorry for the rant.
 

MIch21

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Hello

Sorry to hear about this. Which Mortage broker did you try? I went with first mortgage that are very good. I dont know if they are in your area.



Im not a mortgage advisor - but I had lodgers when I first got a mortgage..and when they asked me if I was getting lodgers I said no. little white lies.

I hope you can find a solution. (Don't worry about your age - I found my partner at 38 and now have a child).
 

homie

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Sounds bollocks to me. If I'm paying the mortgage on time then its none of their business if I want to let a family member move in, either temporarily or permanently. A bit different to having a lodger as you know your mum isn't going to wreck the room and then disappear, and your not reliant on her 'rent' to pay the mortgage.

If it were me I'd go to another broker and take mum out of the application altogether. That's just me thinking out loud though, I'm not in anyway qualified to give advice.
 

The Reverend

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Aw Man. This will be a pain to unravel.

1st
You can buy a property in your name, you don't need your mum's name on the mortgage. She is 68, very few mortgage companies will allow her to be named on a mortgage as she will be both jointly and seperately liable for the payments.

2nd
When talking to mortgage companies, you have a £180k deposit. They may want to see a statement with the money in your name on it. Tell them it is held in various places and you'll have the money to transfer when it is required.

3rd
The Mortgage Company *may* want your mum to sign a document that she has no legal rights over the property. This is standard and is there to protect them if you get evicted

4th
Your mum can live in any property, yours included. It can be formal (she pays rent - peppercorn or otherwise) or informal.

5th
The only real worry is if your mum dies in the next 7 years. You can buy insurance to cover this - its not cheap but it does exist.

My recommendation would be

  • Find a new mortgage broker (L&C are good - I can recommend them and get £25 or something, let me know)
  • Find out what mortgage they can offer in principle.
  • Your mum's cash is just your deposit. Refer to it as 'your deposit' from 'savings'
  • Buying a house takes time. If you can, get you and your mum to open cash isas now and at the start of april. That will be £80k (2 x £20k for her, 2 x £20k for you) that will earn some tax free money (or not) until the house purchase. It also moves some of the cash out from her and to you. Getting her to withdraw the cash will be scary and involved lying to the bank (its to pay some builders for work doing) but it will break the digital link between the payments from your account to hers. You could also do it as a bank transfer (which is safer) but keeps that link there.
  • Find the house you want.
  • Make an offer.
  • Move in.
  • decide whether you want IHT insurance* (see below)
  • Enjoy your life.

I can neither confirm or deny that I've seen similar things in the last couple of years. The biggest worry is the 7 year thing but by using the ISA route above, you will reduce her IHT liability*.

Don't give mortgage companies your life story. Just the facts. You want a mortgage based on your income and you have a deposit of 'x' from savings.


[edit]
I really think whoever is talking to you about money and 'finance' should be shot. There is no need for your mum to be on the mortgage OR for her to get some crazy reverse equitity release mortgage. - BE WARY of anyone suggesting these things. [/edit]

My advice is only advice, obviously there are all sort of implications here but really, everything should be ok and no-way as stressful as it is being made for you.

*You only pay tax after the first £325k so unless your mum has a lot of jewellery, it sounds like she doesn't have a house anymore so you wont be anywhere near that amount.
 

unicornrider

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Thanks guys, the place I went is known to be the best place locally, loads of people in weird situations have got mortgages through them which is why I went to them.
The issue of the 'gift' and it not being considered a gift as she benefits (by having somewhere to live) is the main sticking point.
We are in no hurry, so I will suggest that when she's sold up that we seek advice elsewhere to see if this really is the only option as to me it sounded nuts.
I guess it just shocked us that something we thought would be fairly straightforward would not seem so.
 

MrsSins

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I am wondering if this is a lot more to do with the social care side too? If your mum gets poorly they'll have an in depth look at her finances to see if she qualifies for free care. Selling her home and giving you the money for a deposit will definitely impact that. I don't work in that field anymore so can't advice more specifically, but worth doing your homework. It's never as straightforward as we think it should be, is it?
 
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unicornrider

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I am wondering if this is a lot more to do with the social care side too? If your mum gets poorly they'll have an in depth look at her finances to see if she qualifies for free care. Selling her home and giving you the money for a deposit will definitely impact that. I don't work in that field anymore so can't advice more specifically, but worth doing your homework. It's never as straightforward as we think it should be, is it?
This is exactly what the mortgage advisor brought up, they can look much further back than 7 years to track money. The irony being by moving in together we are hoping to negate social care as much as possible as this is what she did for her parents. But the long and short was they want their money for her care, so lenders see her as a risk for losing the property.
 

The Reverend

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This is exactly what the mortgage advisor brought up, they can look much further back than 7 years to track money. The irony being by moving in together we are hoping to negate social care as much as possible as this is what she did for her parents. But the long and short was they want their money for her care, so lenders see her as a risk for losing the property.
She doesn't need to be named on the mortgage.

the local authority will care about her money. Your mum can do what she likes with her money - irony is that if she had £180k and lost it at the bookies, they wouldn't give a shit, but give it to her daughter and then suddenly EVERYONES looking to commit fraud.

To help you out I'm looking at the AGE UK website


When your council is deciding whether getting rid of property and money has been a deliberate deprivation of assets, they will consider two things:

  1. You must have known at the time you got rid of your property or money that you needed or may need care and support
  2. Avoiding paying for care must have been a significant reason for giving away your home or reducing your savings.
I think 1) is a scare tactic. If your mum doesn't need support now, then she can't expect to need it in the future. That is a reasonable assumption.
2) isn't applicable as your mum is looking to help her daughter buy a home. That is the only reason she is looking to help you.

Then Also see.

The timing is important. The council will look at when you reduced your assets and see if, at the time, you could reasonably expect that you would need care and support. The local authority must decide based on all the case facts and clear reasons, which could be challenged.
If you were fit and healthy, and could not have imagined needing care and support at the time, then it may not count as deprivation of assets.


So, whatever she does, she needs to do as soon as possible to allow time to pass. And she needs to do it while in her best health - with health not being any part of the decision making process.

______________________________________________

You are looking at 2 seperate things here.

a) Getting a mortgage
b) Dealing with the council if your mum needs care.

Get a) Sorted as soon as possible, discussing it as your requirements with your deposit and your home.

b) Deal with this when it happens. Worrying about it now doesn't help anyone. Worst case they will want you to sell your house. This puts you in no worse situation than you are in now. Best case they will not care and thats it.

Speak to L&C mortgages and see what you can get in writing and go from there.

p.s. I'm certain that parents can 'gift' children £3k a year. If you are 40 then that would equal £120k. If she was just holding on to the money until you needed it, what is the problem ;)

p.p.s. I hope you can resolve this in a way that works for. Don't get stressed out too much
 

MrsSins

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I’d agree with doing it sooner rather than later. Having only your name on the mortgage if possible. With any luck, your mum won’t need care and this a great arrangement for you both for many years to come.

We can’t always live with all the ‘what if’s’. Be sensible, but also do what works best for you now, with your mum hopefully being in good health and you two able to support each other.
 

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