Hi
My son-in-law took out a Mortgage on a property many years ago, to help his parents
He facilitated the mortgage and the mortgage and the property are both in his name.
However, his parents have lived in it and paid the mortgage payments via their own bank account
for many, many years. It has always been viewed as being their property albeit in their son’s name.
It is currently worth around £180k and the outstanding mortgage now amounts to £40k
His parents are now too old to take out a traditional mortgage to clear the mortgage in his name
to enable transfer of ownership and they do not have savings from which to do so.
The main problem is that my son-in-law and my daughter are now burdened to have this property in
his name because they now wish to purchase their own home and his parents have no desire to move.
This means that should my son-in-law and my daughter want to buy their own home, then it would
a) be regarded as a 2nd property and attract the extra 3% Stamp Duty and b) the £40k Mortgage in his name
would reduce their own borrowing capacity significantly.
If the property were to become mortgage free and transferred as a gift to his parents, then once it was in their name, they could
apply for an Equity Release loan via a Lifetime Mortgage. However, for it to become mortgage free, we would need to lend the money e.g £40k to our daughter and son-in-law to facilitate this. His parents could then raise the money back via Equity Release to repay the loan we had made originally ...
The question is, how could this best be arranged so that we protect both ourselves and all parties concerned ?
I assume that we could draw up a loan agreement between ourselves and our son-in-law and that they could do the same
between themselves and his parents ?
I understand that the property in the parents name may leave it open to being claimed against by the local authority should elderly care need to be funded in the future, but other than that, are there any other issues or implications that would need to be explored ?
Would the repayment of the loan monies between my daughter & son-in-law and his parents cause any issues with being liable to the local authority claim against it as being a deprivation of assets ?
Are there any other workable solutions that overcome my daughter and son-in-law achieving both a) avoiding the second home extra 3% Stamp Duty and b) not being penalised against their own borrowing fir a new mortgage.
Many thanks in anticipation of your kind assistance
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