I am looking for some advice. I currently live in 3 bedroom semi-detached house. My Dad lives abroad. My sister is away at university and about to do a masters. For this reason it is only Mum and myself here most of the time.
My Mum is due to retire around Christmas. She finalised her divorce with my Dad whilst I was at university. I was not aware at the time that she had plans to sell our house. This never came to mind. She plans to use the funds to buy somewhere for her and boyfriend to live. I am keen on staying in this house and possibly having friends move in and pay rent to help keep the household going.
It is my intention to “buy” our house from her as the house it meets my needs and it not far from the station. I do not drive so this is quite important for me. Mum and I are not on the same page at all. She believes that I should find a small house or flat to move into. Regardless, I am keen to find a remain in our house.
I have around £90,000 in savings. My Dad owns a shop which he is currently in the process of selling to the current tenants. He will be giving me £50,000 to help. My Grandpa gives myself, my sister and our cousins a few thousand every so often. This is our inheritance being paid as a gift to avoid most of being swallowed by inheritance tax.
I was under the impression that Mum would be willing to sell the house to me at a fair price. Although it emerged in a conversation, we had over Easter that she wants to sell it for market value. She believes it is worth far more than I do. The house opposite sold for £221,000 in 2018. I was hoping to buy our house from her for around £200,000. A lot of work needs to be done, such as the back boiler needs replacing and the roof too.
I believe I may be around £80,000 short. I will probably need to look into getting a mortgage. However, I don’t believe I will be able to get one.
I currently work a few different jobs but am self-employed. I earn roughly £30,000 I have been meaning to get my tax situation sorted for a while but been reluctant to. Declaring everything will be a challenge and lead to me losing a chunk of my income – money I need to pay Mum off to keep our house. I am looking for additional income opportunities to help boost my earnings. Although the pandemic is not helping things.
Income Tax, National Insurance will eat up a lot of my income. Student Finance England will probably jump in to take their share too.
My Dad could potentially sell more assets in his country to help me. My Mum could perhaps allow me pay her £200,000 and then pay her the rest in time.
Is it in my interest to do a self-assessment and just take the hit? Apparently, you need 2 years of tax returns to be approved for a mortgage. Obviously, come Christmas I will not have this. I have the feeling I have been a little naïve up to now. Can I get a mortgage without returns? Will I be stung with a lot of fines? My focus is to generate the funds needed to keep our house. I could take out a personal loan I believe?
Does anyone have any advice please?
Everything you are trying to achieve appears possible, but you will absolutely require one years tax returns. Whilst many people may be sympathetic to your view on tax vs saving for a deposit, no broker or lender can entertain a self employed person deliberately not declaring an income to avoid paying tax.
Before you get formal advice I think it is critical to understand the exact terms of any deal with your Mother and then seek formal advice with a clear understanding of the agreement.
Best of luck