About 10 ago years my aunty bought her council house for about 15000. My father gave her the money to do it. She has lived in it rent free since then and theres an understanding it will be left to my father once she dies. The house would fetch around 50,000(its in the outer hebrides and is a one bedroom flat). She owns the house not my father. If she was to go into care what would the situation be? Would she be forced to sell it to fund her care? Can we get round it simply by putting the house in my fathers name(she would be willing to do that)? She lives in Scotland and us in england if that makes a difference. Thanks for reading. Rob
Scotland-House and going into care
Nov 26, 2006
6 Replies
No, that wouldn't work. The best you can do is have a formal loan agreement for the £15,000 from your father. £15,000 compounded over 10 years at 7% would be £29,507.27. You might get away with a higher rate in the earlier years.
So from that i guess you are saying she would be forced to sell but that my father if he drew up a formal loan agreement he would be entitled to
29.507.27. Could my father say buy the house of her now for a small amount or would that not be allowed? Could he even buy it off her for 20,493. Thats the 50,000 value of the house minus 29,507 then her say over the next 5 years her gift us the money back. I cant see her going into care in the next 5 years
That would be classed as depriving herself of capital, so she would be treated as still having it.
In 5 years time, this loan would be £41,385.47. What the house would be worth is anyone's guess.
"Personal and nursing care is available without charge for everyone in Scotland aged 65 and over who needs it, whether at home, in hospital or in a care home.
Free nursing care is available for people of any age.
The Executive has provided £553 million for this policy since it was introduced in July 2002."
from
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Regards,
It doesn't cover all the fees though as there is also a 'hotel' element.
See also this other page from the same site.
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Neb
Base rates from 1975 here -
As a guide you'd need base rate + 7% to get the loan to match the house price -
10 years @ Base rate = £25,004.94 10 years @ Base rate + 2% = £30,483.10 10 years @ Base rate + 7% = £50,015.15Value at current date = (1 + ((Current date - Previous Date) / 365.25)
- (Base rate number / 100)) * Value at previous date
So the question is what is the highest rate of interest that you can get away with ? No doubt HMCE will use a comparable unsecured loan rate. If you could prove that she had a poor credit history at the time then the rate will be higher.
hth
Daytona
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