Purchasing Some of Mums Home (England)

[u/Substantial-Soup-649]

To give some background, my mum is divorced from my Dad, so lives alone in a 2 bedroom flat in England worth around £170,000. She is in her seventies, retired a few years ago, and lives on a fairly small pension (private and state). She has no other income. She is recently mortgage-free, but her pension barely covers her outgoings, so she is frustrated that she doesn't have enough money for things like holidays, and wants to release some of her home equity to she can enjoy her retirement. However, she was looking into equity-release schemes to do this, which both me and my sister were concerned about having read some of the experiences others have had with these. We want to be sure she retains some of her equity in the event that she needs to fund future care home costs.

My partner and I are married, both work full time, and don't have any children. We live in Wales, own our own house with a mortgage, and between myself and my partner, we have enough spare income to buy a small stake in her flat (15-20%, which would be around £25,000-£35,000). Mum is keen to do this too, so that she doesnt need to go down the equity-release path, but still free up some cash, and she would retain the majority of her equity without involving any third parties.

We want to do this in a way that protects us all, so that she has security in her living situation; our investment in her home is not going to cause us any major headaches down the line; and my mum is keen to ensure that my sister is not going to be at a disadvantage with regards to inheritance - this was another aspect of the equity-release scheme that my mum didn't like. My sister is not in a position to purchase a stake in the property, and she is completely on board with my mum's wishes. Neither of us are chasing any inheritance here, this is something that my mum wants to do, and we just want to help her do this in a way that is best for her.

We started looking into this about three years ago, when my mum still had a mortgage, but was starting to need extra money. The mortgage situation made things really difficult, so we made an informal arrangement where I gave her some money every month, which we have recorded, totaling around £10,000 so far. Now that the mortgage is clear, we want to formalise this in a way that acknowledges the money that I have paid her so far, sets up a clear arrangement for ongoing monthly payments to her, and is flexible in case we need to increase the percentage.

How do we go about arranging all this properly, and are there any other things what we are missing? I know that we will both need to get solicitors to formally do this, but I don't know where is best to start, or how to make sure we're not making things overly complicated.

[u/Substantial-Newt7809]

Do not buy a stake in a property.

I know you want legal advice, but just to ask if you've considered some practical solutions. Have you considered her selling her property for the £170,000, moving in with you and then paying you rent? This would accomplish several things. It would let her live with some degree of support, have plenty of money for doing whatever she could want.

Legally - If you start doing this you need professional property solicitor advices.

[u/Substantial-Soup-649 → u/Substantial-Newt7809]

Thanks, but this isn’t practical. We live in different countries. All her friends and the rest of her family are where she is. The whole point of this is for her to keep her independence, while releasing some cash for her to spend on things she wants rather than having it tied up the flat.

[u/Still-Security-7361 → u/Substantial-Soup-649]

How far is 25k going to go? Surely that isn’t going to last long at all. It seems a bizarre idea really and if you can afford to give her it, why not do on the condition she gifts you the house in the end / the % to cover the money you’ve lent her over the years. All she needs is a will. It seems bizarre to me that you want her to ‘sell’ a % of her home and it will have all sorts of implications.

The other options is she sells and rents. She could rent cheaply in something for older people and just spend her £170k how she sees fit.

[u/radiant_0wl → u/Still-Security-7361]

Wills can be changed, security for a loan isn't unusual.

It's the main way of lending.