Applying for a mortgage secured on parents second property

[PatrickDub]

My friend and husband are hoping to move into her mothers mortgage free investment property for good. Ideally her mother would like to just gift the house to her daughter, however her mother does not want to bring about a CGT bill as she couldn't possily afford it, so she is happy for them to move into it. She has owned the house since the 1970's.

How would a bank view this in relation to the couple then applying for a mortgage in order to renovate the property? The house is willed to them. Would a bank accept the fact that the house will essentially be theirs down the line and secure a loan against the property?

The house is worth approx E650k.

Thank you.

 

[mathepac]

... The house is willed to them. Would a bank accept the fact that the house will essentially be theirs down the line and secure a loan against the property? ...

Absolutely not. They will not be even considered for a mortgage on a property they don't own. A will can be changed and in any case the beneficiaries may pre-decease the person making the will.

If they move into the mother's investment property and don't pay rent, they may be judged to be in receipt of gifts to the value of the annual rental and have a CAT bill.

 

[PatrickDub]

They will be paying rent for the foreseeable future.

Surely a will can't be changed if there's a charge over the property?

Would it not be similar to her mother going guarantor for the loan, using her property as collateral?

 

[mf1]

Other possible scenarios:

They buy the house from mother , raise a mortgage, pay the CGT.

Mother sells house, pays CGT and gifts balance of money to offspring to buy own property.

Mother raises mortgage on property ( subject to her own financial circumstances) and keeps property in her sole name and they rent it from her. When she dies, offspring get property with no CGT payable.

They rent the property and raise a personal loan to do renovations.

What they are proposing is , essentially, the best of all possible worlds, which is unlikely to work in practice.

mf