Want to solve the housing and social care crises? Then share a mortgage with your grandma

If granny lives past 90, she will have been in the property market 70 years and her delicious nest egg will have boiled to a point of approximately £3m

Grace Dent
Monday 30 May 2016 18:10
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Relying on grandparents to secure a mortgage could be the only way
Relying on grandparents to secure a mortgage could be the only way

As lenders One Family follow Nationwide in its plans to introduce intergenerational mortgage schemes, I wonder if the era of the lonely, forgotten granny sitting at home gasping for human contact may be on the out. And for rather spurious reasons, I must add. Because, now, lenders seem suddenly keen to help grandparents share a home loan with a younger relative.

This is targeted at today’s sixty somethings, who, after paying around £12,000 for a first home in the 1970s, might now be living out their later years in a property worth £300,000. If granny lives past 90, she will have been in the property market 70 years and her delicious nest egg will have boiled to a point of approximately £3m – in time for her to peg it and hand excruciatingly large chunks of it to the tax man.

I say excruciating, although many of my ardent lefty readers adore paying tax so much that not only is January 31 somewhat of a second Christmas to them, but inheritance tax is simply the glorious death-tinged icing on the HMRC cake. Never mind; several grandparents sitting on a small fortune right now probably feel rather differently. Especially as their grandchild may be paying £1,000 per month to live in a pod next door to a nocturnal bongo player in the glaring oxymoron that is “luxury mega-commune” living.

'Pop-up squat' in Knightsbridge for Housing Bill

We are now so deep into an affordable housing crisis that millennials are giving weak thumbs-ups style interviews from serviced hutches in 500 person, 11 story, Orwellian communes in Willesden, as if they are the lucky ones.

With this horror in mind, the new One Family mortgage allows grandparents to secure a mortgage against the value of their own property for the first time home of a grandchild, with the younger lender paying the instalments. Not many other details have been released about these ‘you-and-your-gran’ deals, but I like to think that the information leaflet contains a useful section on how to raise the matter tactfully with your grandma.

Presumably this recommended approach would be more tactful than barging in on granny one day yelling things like: “Why? Why have you got four bedrooms and a 30ft garden when you only sit in one small armchair and watch ITV Encore all day? This isn’t fair! Life isn’t fair. Can you not see I’m in the prime of life and have to share a cramped ex-council maisonette in Tring with four maniacs I found on Gumtree? Have you heard about One Family mortgages? Look, I’ve printed the forms!”

One might prefer to go gently in the wooing. If you have been absent for a long time, begin by reacquainting your grandparent with what you actually look like in today’s terms, rather than their most recent photograph where you’re 11 years old, wearing a school jumper and have a home-cut fringe and impetigo.

Build this up to regular face-to-face in the same room as your potential investor, excuse me, beloved grandmother. Note: social media updates are not the same. Nobody is going to convince a 70-plus woman with a Tesco pay-as-you-go, big button Doro phone that it would be easier to discuss her undersigning a £350,000 mortgage via Snapchat. You may need to employ the enormously old-fashioned, outdated communication techniques such as turn up in person every other week for a cup of tea, armed with a box of Fondant Fancies.

One might need to accept that, if granny is risking her security to get you a mortgage, she might want to know how you’ll be treating the house once it belongs to the pair of you. Who will be living there? That boyfriend she doesn’t approve of? Or doesn’t know about? Why did you need those extra bedrooms if you’re now hedging the bets on having babies? How will you pay the monthly instalments if you refuse to take a dull job because you’re determined to follow your dreams?

More than this, if a person signs a mortgage with their grandparent, then only a stone cold heart wouldn’t make it a second home of sorts for them when they get very, very old. The generous grandparent should be invited there at weekends, Christmas and birthdays. They should die there if they need to, rather than be abandoned in a care home.

Maybe this should be part of the inter-generational mortgage paperwork. The oldies gave you a leg-up when you needed it, and in their closing days it should be the grandchild’s turn to pay them back with time, care and patience.

I spent my twenties chasing money and rarely going back home to where I grew up. It’s ironic that, now my grandparents are all long gone, I see that the pleasure of spending time with them is something my money could never buy.

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