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Joshua
Joshua, Lawyer
Category: Law
Satisfied Customers: 26070
Experience:  LL.B (Hons), Higher Prof. Dip. Law & Practice
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I am 66, retired early at 53 on health grounds. consequently,

Resolved Question:

I am 66, retired early at 53 on health grounds. consequently, I had to convert my mortgage to interest only, due to a reduction in my income, leaving me unable to pay of the balance in 4years time. I am well but still unable to work due to longstanding exhaustion and pain. Is it possible for my daughter and son to take out a mortgage of £70,000 on my property using the £50,000 equity in it as a deposit, as I will no longer be able to get a mortgage at 70, and am then likely to be homeless.
Submitted: 2 years ago.
Category: Law
Expert:  Joshua replied 2 years ago.
Hello and thank you for your question. I will be very pleased to assist you. I'm a practising lawyer in England with over 10 years experience. May I ask would you propose to continue to live in the property please?If so would you propose to pay any rent?Would either of them live with you?Finally if you do propose to continue to live in the property would you require any security of tenure?
Customer: replied 2 years ago.

yes I wish to continue living in the house as it is small and meets all my physical needs.

I would prefer to pay some rent.

No,they both have families of their own and live in the same village as me.

I do not feel that i need a security of tenure unless it is advised.

Expert:  Joshua replied 2 years ago.
Thank you. It is quite possible in principle for your children to do this providing they can obtain mortgage financing based on their credit scorres and income. Assming this is not a problem you would as a condition of the mortgage application need to gift them the equity in the property - mortgage lenders do not allow situations where parties other than the mortgage borrowers own equity in a property. This is risky for you because it means you are gifting away you main asset which makes you reliant on your son and daughter's "good graces" so to speak in terms of your future occupation of the property. If you are willing to take this risk then they will have to become the new legal owners of the property and obtain a mortgage in their name. All of this in practice happens on one day where your existing mortgage is paid off, the property and equity is transferred to them and their new mortage is taken out. After the mortgage is completed it would be sensible to consider entering into a simple life trust agreement with them (using a different solicitor to the one that acted for them in the mortgage). This simple trust deed can provide that although they are the legal owners of the property you have a right to live in it for life. This has two benefits. the first is that it protects you in the event that either of them decided they wished to sell the property in future and force you to leave (I appreciate that is unlikely) but also protects you in the situation where anything were to happen to either your son or your daughter which might mean that there interest in your property passes to someone else such as a spouse or partner. The life interest trust means that whoever might become entited to the property through fate of the future, you cannot be made to leave (unless the mortgage company repossesses due to failure to pay the mortgage) so gives you security and comfort. The second benefit is a benefit to your children because if you establish a life interest trust which gives you rights to live in the property until death and you do then they will pay no capital gains tax on any gain the property makes between the time they become the legal owners and the time the property is eventually sold. Obviously as things stand, you do not pay any capital gains tax because the property is your primary residence but remember that if the property is transferred to your children as will be necessary for your proposal to work, your property would not be their primary residence and therefore when the property is eventually sold in the future, capital gains tax will be payable on any gain. A life interest trust allows your children to potentially avoid that tax. I hope the above is of assistance? If you have no further questions for now I should be very grateful if you would kindly take a moment to click to rate my service to you today or just reply back to let me know if the above is helpful. Your feedback is important to me. If there is anything else I can help with please reply back to me I'd be very grateful
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