Retirement Interest Only Mortgage.

In order to treat all of your children equally it sounds like you are anticipating borrowing a substantial sum.

Definitely avoid equity release as a lifetime mortgage as compound interest will soon accumulate into a substantial debt that could swallow all the equity in your house if you live to very old age.

As I understand it,with RIO, lenders will look at your projected retirement income not what you have coming in now or the size of the pension pot.

I also understand that the arrangement fees are high so take that into account.

Take a look at MoneyHelper.

www.moneyhelper.org.uk/en/homes/buying-a-home/retirement-interest-only-mortgages

Look at what flexibility different providers offer and it goes without saying - do your sums.

While I can see you want to be fair to all your children, you would be getting into a lot of debt just to help the one who is really struggling right now. I would talk it over with all of them.

I'd suggest you talk through your options with an independent professional financial advisor as well.
They will know more about the different products available and will be able to discuss the advantages and disadvantages of each one in relation to your circumstances.
In my experience this advice is free.

There are lifetime mortgages where you can pay the interest monthly or annually thereby avoiding the compound interest.

Therefore pretty similar to RIO mortgages.

Please please make this move very very carefully and thoroughly researched.

It might help to speak with an experienced mortgage broker.

Your home is your biggest asset, before you borrow anything against please think about what would happen if either you or your DH becomes very unwell or dies in the next few years.

You need to think very carefully about this. I agree with what has been said already, that you will be taking on a lot of debt if you give money to all three children, and you may find yourselves with a very much reduced income after paying the interest, which I doubt will be fixed for the life of the mortgage as it is with equity release, though I certainly wouldn’t recommend the latter. Do you want to live with the worry of increasing mortgage interest rates? Also, if one of you dies the income of the survivor will probably be greatly reduced.

There is also the danger that if care is needed this could be considered as deprivation of assets. Personally, I wouldn’t jeopardise my financial security in old age.

Would it be possible for her to remortgage joint with your husband? Paying the payment with a little help (agreeable to all).

That would entail the husband becoming a joint owner, jointly responsible for the daughter’s mortgage in its entirety, and involve payment of a stamp duty levy based on his already owning another property. And then there’s the question of what happens when she meets someone else and Dad is a joint owner of the house and can be called on to pay the entire mortgage …. I wouldn’t recommend that.

Barleyfields

That would entail the husband becoming a joint owner, jointly responsible for the daughter’s mortgage in its entirety, and involve payment of a stamp duty levy based on his already owning another property. And then there’s the question of what happens when she meets someone else and Dad is a joint owner of the house and can be called on to pay the entire mortgage …. I wouldn’t recommend that.

My husband has signed with 2 of our daughters, soon out of University. I wondered why that was not a possibility. Thank you for explaining reasons.

has did sign

Yes DH has already spoken to a specialist mortgage advisor he knows through his work.He works in finance. He is going to come and sit down with us and then we will talk to all our DCs to see what can be done. The amount of equity in our house would still be be enough to pay off the mortgage and buy somewhere else outright down the line if we had enough of mortgage payments or found them too onerous. I love our house but we do have a very big garden that realistically in 10/15 years we may well needs too much upkeep.
I think helping out the DD who needs it most know and keeping mortgage smaller would be less worrying. But DH has always maintained,and seen first hand the problems inequality of inheritance can cause. Our DDs are so close I can't see it but you never know.

And yes I'm aware we would have to declare any significant gift money wise.
The annoying thing is the pressure her ex is putting on her to get his money out of the house to clear his debts.His own mum is more than able to help him out but refuses.Its very sad really because we don't dislike lad.He's the product of a pretty dysfunctional family we feel.Had a step dad who treated him as very second class.And a half sibling who was given everything.

This question was on Money Box last Saturday, see if you can catch up on BBC sounds. I didn't hear it but saw it advertised on BBC breakfast.

Norah

Barleyfields

That would entail the husband becoming a joint owner, jointly responsible for the daughter’s mortgage in its entirety, and involve payment of a stamp duty levy based on his already owning another property. And then there’s the question of what happens when she meets someone else and Dad is a joint owner of the house and can be called on to pay the entire mortgage …. I wouldn’t recommend that.

My husband has signed with 2 of our daughters, soon out of University. I wondered why that was not a possibility. Thank you for explaining reasons.

Perhaps he acted as guarantor?

Just a thought. It sounds like your daughter can afford to pay the existing mortgage on her own just could not afford to borrow any more to buy out his share of the equity.

If it’s less than £50,000 then a gift of £3,000 (so within the annual IHT exemption should the gifter die within seven years) would cover the repayments on an extra £50,000 for a year (assuming a broker could arrange a bigger mortgage on that basis) while she decides what to do in the longer term after the children have had time to adapt to their father leaving.

That only covers a year but it’s some breathing space while the family as a whole consider what’s fair to everyone without parents getting into debt.

Your daughter moving to a more affordable home sounds like a good option especially if the family could stay in the same school catchment.

Who knows what might happen? A promotion at work; a drop in interest rates, rising property values. She might meet someone new. Everything could look very different in a year’s time.

And the Moneyhelper site says arrangement fees for RIO can be up to £3,000.

I assume the daughter doesn’t meet lenders’ criteria to borrow the full amount needed to buy out her ex.

Barleyfields

Norah

Barleyfields

That would entail the husband becoming a joint owner, jointly responsible for the daughter’s mortgage in its entirety, and involve payment of a stamp duty levy based on his already owning another property. And then there’s the question of what happens when she meets someone else and Dad is a joint owner of the house and can be called on to pay the entire mortgage …. I wouldn’t recommend that.

My husband has signed with 2 of our daughters, soon out of University. I wondered why that was not a possibility. Thank you for explaining reasons.

Perhaps he acted as guarantor?

I just asked, I was wrong, he was a guarantor.

Perhaps that would not work for washerwoman.

That's true.She is in line for promotion and payrise later in the year.And is going to go back to the mortgage lender to discuss extending the term of her mortgage. It seems guarantor mortgages aren't as available now.But if she could extend hers as far as possible we could always help with payments in trickier months in the short term.Neither of her siblings would have any problem with that.Indeed her sister has helped her out recently when her ex reneged on a payment for something he had agreed .
Realistically moving house downwards isn't a great option. She's not in a very valuable property as it is.Plus the costs of moving.We would ideally to help her stay where she is.Not saying she eouldnt move later when things are more settled.

Thanks for your replies. Just mulling it all over.

Note to self: don't type fast and do proof read.

I just asked my husband and he said he was a guarantor.

Whole other meaning to 'I just asked'.

Yes we will explore all options Including the guarantor. Maybe if she talks to her lender and extends the term and amount we can make up the shortfall out of savings.Then make things right with the others later.

That sounds like a plan - and a family that pulls togther.

Helping all three daughters equally from your income in small bites sounds a better plan rather than you getting into debt.

You may already know this but here's another Moneyhelper page that covers IHT implication including gifts from surplus income.

www.moneyhelper.org.uk/en/family-and-care/death-and-bereavement/gifts-and-exemptions-from-inheritance-tax

Here's the HMRC regs on this:

www.gov.uk/hmrc-internal-manuals/inheritance-tax-manual/ihtm14255

Please don’t guarantee your daughter’s mortgage. That would make you wholly responsible for it should she be unable to keep up the payments for any reason and she may find another partner who seeks to take advantage of that. You can’t extricate yourselves from a guarantee without the lender’s agreement, which would not be forthcoming if your daughter is having problems.