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1. Dear Sophia, if you intend that this be a gift to your parents, then the only thing to consider is IHT. However, if you wish to either obtain repayment of these monies or to obtain a property interest in their home, as a result of the advance, you will need to draw up an agreement whereby you are given either the right to seek recoupment of the loan or that you get a property interest in the property subject to the mortgage. This too can have tax advantages, as your parents' estate will be reduced in value by the amount of money due under the loan or the value of the property interest.
2. The tax advantage of treating the monies as a loan is that you don't then pay IHT upon the death of your parents' on the value of the monies you have advanced to them to pay off the mortgage.
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4. You can have a simple loan agreement drawn up to provide for repayment upon the death of the second of your parents or upon the sale of the property. A solicitor can draw one up for you and register the loan as a charge on the property so it takes precedence over any other competing interest. However, the issue of registration of it as a charge only arises if there is the possibility of someone else lending money.
5. The terms of the loan agreement can be open ended. You don't have to specify an exact time of repayment. However, you will merely specify occasions when the loan can be called in, such as the death of the second parent or the sale of the property.