Mortgage help or advice

robanemma

My dad has a meeting with the banks about remortgaging the family home to buy a 2nd home that me and my partner and 2 kids would live in and pay the monthly repayments as i am in construction and my partner is part time so we would not qualify for a mortgage..he is 50 years old with 30 thousand left on his current mortgage to be cleared in 4 years ..well paid job in the hse of about 40 thousand a year and my ma 15 thousand a year both permanent jobs ..he has remortgaged before has never had a bad credit history or anything..there is any amount of big spacious nice houses goin for a 100 grand in and around our area which is all he will be looking for ..the house were actually renting which we love is going for 115 grand ..what are his chances of approval from the bank...also the home house would be worth in today,s market upwards of 200 grand

Moonbeam

40k is not a very high wage.He would probably need to get an investment mortgage on the house which could be more expensive. You would have no rights to it unless you bought it with him.
If I was you would save up and buy it yourself,115k is not a lot and you would not need massive earnings to get it.

robanemma

saving is tough while renting at the same time... being honest saving enough for a deposit is near impossible as is getting a job in construction some weeks are good some some are non exsisting so mortgage of our own at the moment is out of the question...moonbeam when the mortgage is paid of the house would be signed over to me and my partner so rights to the house would not worry me..it just makes sense to pay a remortgage my da gets and have something to show for it in 15 to 20 years than pay a complete strangers mortgage for nothing

Stheno

robanemma wrote: »

saving is tough while renting at the same time... being honest saving enough for a deposit is near impossible as is getting a job in construction some weeks are good some some are non exsisting so mortgage of our own at the moment is out of the question...moonbeam when the mortgage is paid of the house would be signed over to me and my partner so rights to the house would not worry me..it just makes sense to pay a remortgage my da gets and have something to show for it in 15 to 20 years than pay a complete strangers mortgage for nothing

At his age, what term mortgage would he be looking for?

robanemma

he has a mortgage of 30 thousand and a top it up of 100 thousand would buy us a house no problem in 2days market..home house worth upwards of 200 grand..so with both houses been worth in total of 300 thousand and a mortgage of 130 surely it would not be a risk for the bank..maybe a 15 to 20 term mortgage with us giving 600 to 700 a month towards it

The_Morrigan

OP my Dad remortgaged his home about five years ago and the bank wouldn't give him a term that ran past his retirement age, he was 55 at the time. If the banks are still imposing that restriction 100k over 15 years is one hell of a repayment, not to mention all the associated costs like life insurance, mortgage protection that he will have to pay.

Stheno

The_Morrigan wrote: »

OP my Dad remortgaged his home about five years ago and the bank wouldn't give him a term that ran past his retirement age, he was 55 at the time. If the banks are still imposing that restriction 100k over 15 years is one hell of a repayment, not to mention all the associated costs like life insurance, mortgage protection that he will have to pay.

That's what I was thinking too, you'd be looking at close to €850 a month in repayments on the NEW mortgage, not including life insurance, mortgage protection etc.

Plus OP do you have a deposit or are you looking for your father to mortgage for the full value of the house:?

robanemma

it will be 15 years i would imagine ..my da is the sort of man that would not mind even if he was out of pocket himself a little bit it would not bother him if he knew our and his grandkids future would be more secure ..if things pick up i could repay more a month ..he already pays 850 a month for the last couple of years to try clear his mortgage ..it was not my idea i called in to the home house the other day and he told me he had a meeting to discuss it

robanemma

we do not have any money at the moment for a deposit but if it came down to be declined on a basis of no deposit for it ..we could get our hands on money for a deposit if that be the case

Stheno

My honest opinion would be that whilst it is very nice of your father to offer to do this, I think (particularly given that you may not be able to cover the mortgage) that you should work out all of the maths completely.

I'd be concerned that your father is putting himself under financial strain unnecessarily

The_Morrigan

OP your dad sounds like a saint but that is some serious business.

Essentially he is taking an equity release on his family home to buy you a house with cash, with the best will in the world families tear each other apart when it comes to money and property.

robanemma

well been honest I would be able to cover the mortgage even the way things are at the moment and things arnt great at the moment weve been renting for 5 years at 600 a month..the way my da would look at it is if he puts himself under financial pressure but leaves us in a better position to send his grandkids to college and make something of themselves he would be a very happy man..the morrigan I know some familys tear themselves apart over money and property I know u can never say never I do not think it would happen in this case

phormium

What happens if for any reason you lose your job and can't pay the payments, your father is liable and his maximum term is probably up to retirement, the last thing you want is your father and mother in retirement facing losing their family home if things go wrong.

To be honest I had to check the date on your original post after I read it, I thought it must be an old thread from the tiger days that had been dragged up again. There are so many people in a mess now because they did exactly what you want your father to do.

The_Morrigan

Op, I bought my own place and my dad gifted me a substantial sum of money towards it..I pay back that monthly repayment to my dad. Dads do these things, it's in their nature. But crap happens and you need to be able to finance your own life.
Personally I think you should take out a mortgage in your own name, it could be a low ltv and if your dad wants to help, then let him gift you a smaller sum of money, not the entire purchase price.

robanemma

phormium as I said I did not ask nor never even mention this to him ...I was out of work before and my partner worked part time never fell in2 arrears on rent ..we have a family car no loans ..apart from esb and gas bills not a whole pile of outgoings non drinkers or smokers ..its not the repayment of the mortgage im worried about its will he be declined for any reason ..as I said he has been paying an 850 euro a month for over 10 years whilst having a good lifestyle

D3PO

robanemma wrote: »

question...moonbeam when the mortgage is paid of the house would be signed over to me and my partner so rights to the house would not worry me..

Its not as straight forward as that.

There is a taxable liability on this as you are only allowed one 30k gift tax free. So when the house is signed over your going to have a hefty tax bill which you wouldn't be able to afford (if you cant save a deposit you cannot pay this tax bill)

This idea you have is not very well thought out TBH. Your father would probably only be able to remortgage over a 10 year term and on his salary he wouldn't qualify for 100k over 10 years anyway, nor would you on your own admission up and down amounts of work, with your partner only working part time.

essentially this idea just wouldn't work. Try find some permanent work and save and then look to buy at a later stage.

trishasaffron

You and your Dad need to look at this from 360 degrees - what if he/your Mum/you/your partner died/separated/get terminally ill during this process. It seems very ill thought out and IMHO even if your Dad suggested it - its your responsibility to protect him. Hope you get excellent legal advice whatever you do.

Trish56

robanemma wrote: »

it will be 15 years i would imagine ..my da is the sort of man that would not mind even if he was out of pocket himself a little bit it would not bother him if he knew our and his grandkids future would be more secure ..if things pick up i could repay more a month ..he already pays 850 a month for the last couple of years to try clear his mortgage ..it was not my idea i called in to the home house the other day and he told me he had a meeting to discuss it

robanemma, What a lovely kind Dad you have:)... how much rent do you pay at the moment ? Have you discussed with your Dad what would happen if either you or him got ill and could not work or if you had no work who would pay the mortgage. As he is remortgaging the family home he could lose it if he could not keep up the repayments. You need to sit down and seriously discuss the advantages and disadvantages for both of you and at the moment. I see a lot of advantages for you and very little for your Dad. At this stage of his life he should be looking forward to his retirement and clearing his mortgage and not worrying about putting a roof over your family's head. As other posters mentioned this is dangerous territory and will more than likely end up in bad feeling. I'm sure there are loads of posters on here who got equity release loans to provide a deposit for their children in the Celtic Tiger years for overpriced houses and now have a noose around their neck and regretting that decision.
You mentioned you could get your hands on a deposit as a matter of interest would this be a loan or a gift ?
Would you not consider moving in with your folks and saving up a deposit to buy your own house.
I would say Banks will not entertain this proposition in the current climate.

robanemma

being honest as I said I don't think repayments would be an issue ..one way or another I have to pay 600 euro a month to keep a roof over my kids head whether that be paying rent or paying my dad,s mortgage ...if it ment workin 3 jobs in the future to scrape by at 40 years of age I would be mortgage free and in the position to be able to afford to give my kids a good education which is all my dad would like to see

The_Morrigan

robanemma wrote: »

being honest as I said I don't think repayments would be an issue ..one way or another I have to pay 600 euro a month to keep a roof over my kids head whether that be paying rent or paying my dad,s mortgage ...if it ment workin 3 jobs in the future to scrape by at 40 years of age I would be mortgage free and in the position to be able to afford to give my kids a good education which is all my dad would like to see

The mortgage will be well over 600 a month though,and there is no guarantee that other rainy day crap won't crop up.
All four of you need to consider the very worst case scenarios here, not daydreaming with rose tinted glasses of a bright future for your kids - you all need to seek, financial, legal and tax advice here.

jlm29

Just curious here, coz I don't know the answer to this myself, but someone else might... If you got the mortgage yourself, could your dad sign guarantor- would that keep it more straightforward. I know someone who got a mortgage 3 years ago when on a one yr contract, and partner in college, because his parents signed guarantor for it... But 3 yes ago is a different time to now of course!

The_Morrigan

jlm29 wrote: »

Just curious here, coz I don't know the answer to this myself, but someone else might... If you got the mortgage yourself, could your dad sign guarantor- would that keep it more straightforward. I know someone who got a mortgage 3 years ago when on a one yr contract, and partner in college, because his parents signed guarantor for it... But 3 yes ago is a different time to now of course!

I would say that would be discretionary in any bank at this stage.

robanemma

as I said before with my dads job he could cover a 850 a month mortgage no problem till the day he retires which I think it will work out at with me paying 600 hundred a month and more some months ..my da is not someone that jumps into things either he will seek legal advice work out tax charges and think it through as I will also....if the banks do accept it will be thought through over and over till we see is it worth while and what risks are we taking ..at the end of the day it was people paying 4 or 5 hundred thousand on a house that wasn't worth a fifth of that kind of money that has the country in this mess ..the house we would be looking to buy are big well built energy efficient homes that went for 350 thousand up to 2 years ago

The_Morrigan

robanemma wrote: »

as I said before with my dads job he could cover a 850 a month mortgage no problem till the day he retires which I think it will work out at with me paying 600 hundred a month and more some months ..my da is not someone that jumps into things either he will seek legal advice work out tax charges and think it through as I will also....if the banks do accept it will be thought through over and over till we see is it worth while and what risks are we taking ..at the end of the day it was people paying 4 or 5 hundred thousand on a house that wasn't worth a fifth of that kind of money that has the country in this mess..the house we would be looking to buy are big well built energy efficient homes that went for 350 thousand up to 2 years ago

That has nothing to do with your situation.

robanemma

yes I know it has nothing to do with my situation ..its a hundred thousand tho not a half a million im sure there is people at my dads age around the country buying 2nd property,s as a retirement fund

The_Morrigan

robanemma wrote: »

yes I know it has nothing to do with my situation ..its a hundred thousand tho not a half a million im sure there is people at my dads age around the country buying 2nd property,s as a retirement fund

It's not a retirement fund though, it's a house for you.

robanemma

he is not going to be paying the mortgage tho he is helping his son and grandkids out which I would like to think if I was in the position to do would do for my own kids ...if I owned my owns house mortgage free by 40 years old that would be worth more to him than any retirement fund

Scortho

robanemma wrote: »

as I said before with my dads job he could cover a 850 a month mortgage no problem till the day he retires which I think it will work out at with me paying 600 hundred a month and more some months ..my da is not someone that jumps into things either he will seek legal advice work out tax charges and think it through as I will also....if the banks do accept it will be thought through over and over till we see is it worth while and what risks are we taking ..at the end of the day it was people paying 4 or 5 hundred thousand on a house that wasn't worth a fifth of that kind of money that has the country in this mess ..the house we would be looking to buy are big well built energy efficient homes that went for 350 thousand up to 2 years ago

Nope people buying houses at mortgages that were significantly more than 4 times there income was the problem.

Nothing wrong with paying high prices for a house (if you want too) so long as you're not stretching yourself.

robanemma

yes but we are not stretching ourselves ..I will have to pay 600 euro a month one way or another ..whether that be paying rent for a mortgage on someone else,s house or a mortgage my da gets for ourselves

The_Morrigan

robanemma wrote: »

yes but we are not stretching ourselves ..I will have to pay 600 euro a month one way or another ..whether that be paying rent for a mortgage on someone else,s house or a mortgage my da gets for ourselves

You're only considering the mortgage, what about all the other ancillary costs are you going to be able to pay those too?
House insurance, life insurance, property tax, legal fees, water charges, payment protection - it's not just the mortgage repayments.
Plus 600 euro is too low, it's more likely to be 850-1,000 per month plus any other taxes and insurance on top of that.

Stheno

robanemma wrote: »

yes but we are not stretching ourselves ..I will have to pay 600 euro a month one way or another ..whether that be paying rent for a mortgage on someone else,s house or a mortgage my da gets for ourselves

The_Morrigan wrote: »

You're only considering the mortgage, what about all the other ancillary costs are you going to be able to pay those too?
House insurance, life insurance, property tax, legal fees, water charges, payment protection - it's not just the mortgage repayments.
Plus 600 euro is too low, it's more likely to be 850-1,000 per month plus any other taxes and insurance on top of that.

Have to agree with The_Morrigan here, interest rates are at an historic low, and are only going to start going up, in five years time that €850 a month might be €1150 a month (every quarter of a percent rise in rates is approx. 25-30 per month extra in repayments, so all you need is rates to rise twice a year for five years for that to happen) and it may become a noose around your dads neck if you cannot stump up the extra.

You mention being mortgage free at forty and being able to provide for your kids education, why not provide for their education, rent and save then aim for a mortgage at forty?

D3PO

OP are you not reading the posts ?

Firstly it wont be 600 a month or even close. Try close to double that (considering he still owes 30k on the house) and your in a better ball park and that's considering record low interest rates. Which will be going only one way and that is up.

What about the significant tax liability you will have when the house is transferred to you which you have ignored in my last post ? How do you figure to cover that ?

What about ancillary costs, life insurance, property tax, house insurance, legal fees etc etc(both for purchase and then a second set of legal costs for transferring the property into your name)

what if your parents get ill or have an unexpected expense ?

this is absolute madness and as nice as your father is being for you to even consider it would show a complete lack of respect to their wellbeing. take off the rose tinted glasses.

Electric Sheep

robanemma wrote: »

yes but we are not stretching ourselves ..I will have to pay 600 euro a month one way or another ..whether that be paying rent for a mortgage on someone else,s house or a mortgage my da gets for ourselves

I wonder if Irish people will ever grow past the "paying someone else's mortgage" view.:rolleyes:

OP, you are paying 600 a month rent, and while doing that, you say you can't afford to save. In that case, how will you handle all the incidental expenses that come with home ownership? Your landlord pays for them now, but you will have to when you own a house.

Stheno

Electric Sheep wrote: »

I wonder if Irish people will ever grow past the "paying someone else's mortgage" view.:rolleyes:

OP, you are paying 600 a month rent, and while doing that, you say you can't afford to save. In that case, how will you handle all the incidental expenses that come with home ownership? Your landlord pays for them now, but you will have to when you own a house.

And just to give an example of that, in one of the worst cold snaps we had in the past few years, my gas boiler went.

Almost 2,000 euro to get it replaced or freeze.

D3PO

Electric Sheep wrote: »

I wonder if Irish people will ever grow past the "paying someone else's mortgage" view.:rolleyes:

OP, you are paying 600 a month rent, and while doing that, you say you can't afford to save. In that case, how will you handle all the incidental expenses that come with home ownership? Your landlord pays for them now, but you will have to when you own a house.

The OP cant afford it. He's being foolish to believe otherwise and worse than that is that going down this road would be foolish and selfish of him.

Stheno

D3PO wrote: »

The OP cant afford it. He's being foolish to believe otherwise and worse than that is that going down this road would be foolish and selfish of him.

Just thinking back to when I bought my house back in 1999, OP you need to consider the cost of furnishing the house, decorating it, appliances (not cheap, if it's new you may need fencing/work on the garden, and it all adds up.

Then deposits for all the bills (esb/gas are about €200 each to get you set up), it all adds up to a lot more than just the cost of buying the house.

The_Morrigan

I'm paying back a principal amount of 238k over 35 years... I'm a few years into that and with mortgage repayments and all the associated costs I'm paying out it comes to about 1800 a month, that is before I start looking at utilities or feeding myself, never mind putting a partner and kids into the equation like you must. OP you really don't seem to comprehend the costs here, you are probably going to have to think about all the costs, not just the rent you will give your Dad.

Electric Sheep

Stheno wrote: »

And just to give an example of that, in one of the worst cold snaps we had in the past few years, my gas boiler went.

Almost 2,000 euro to get it replaced or freeze.

Oh god yeah, SOMETHING is always needing to be fixed. Often, several things at once, seems like when it rains it pours. Until you actually own a house you have no idea how much just plain maintenance can cost.

I know it's hard not to brush off the downside when you think you have found a solution to a problem, but you don't really have a problem. You are renting a house you love and can afford. If you don't qualify for a mortgage, that means you can't afford to buy a house right now, so sit tight, try to save, and when the economy improves houses will still be there to be bought.

Best of luck with whatever you decide!

robanemma

there is other houses in our town ..nice big houses come furnished and everything for 70 thousand would a mortgage of dat size still be a huge risk

MagicMarker

robanemma wrote: »

there is other houses in our town ..nice big houses come furnished and everything for 70 thousand would a mortgage of dat size still be a huge risk

No, that's fine. Go ahead sure.

MouseTail

Yes, for your father its a huge risk, and a very silly and ill advised thing to do.
For you, no risk at all.

okiss

At the moment you can't afford to save for a deposit for a mortgage.
You are paying a rent of €600 per month.
Your mortgage payments would be higher than €600 per month. Along with this you would have the costs for household maintance along with the costs to repare or replace any house hold items like the cooker or fridge ect.
At the moment with renting your landlord has to cover the cost of the above.

Your father may think that he is doing your a favour but if things go wrong he could end up losing his house. At this stage of his life your father should be paying off his mortage or putting money towards his savings/pension and not getting into further debit.

You need to realise that you can't afford a mortage at the moment.
Why not look up consumerhelp.ie and use there budget planner to help you save money.

Mrs OBumble

OP, with your current situation - are you on the council housing list? If no, they why not? If you get a council house, stay in it for X years and then have the option to buy, then you will be in a far better situation, without exposign your father to the risks.


Also, a point no one has raised: you say that you will be paying your father E600 per month for rent. Now presumably that will be taxable income for him - sure he can write some expenses off (some of the interest - for now, maintenace, etc), but on his salary it's likely he will pay close to E300 per month of that in tax. (Unless I'm very mistaken about the tax laws - maybe someone else can comment?)

robanemma

my dad had the meetin with the bank,,they will give him 85000 to buy a 2nd home here are the conditions..he continues to pay the remaining of his own mortgage of 850 a month for 3 and a bit years..The mortgage for the home we will buy will be 510 a month for 20 years ..very managagble were going to own our home while in the process be paying less rent

SeventySix

robanemma wrote: »

there is other houses in our town ..nice big houses come furnished and everything for 70 thousand would a mortgage of dat size still be a huge risk

If you can get a nice big furnished house for 70,000 why get your dad to borrow 85,000? If you are determined to do this then go back and get your dad to lower the amount. It will reduce the risk and the payments a bit anyway. 510 is only the repayment amount at the current low interest rates and dont forget about all the other expenses. Dont borrow more than you absolutely have to. You and maybe your dad would live to regret it.

henryd65

D3PO wrote: »

Its not as straight forward as that.

There is a taxable liability on this as you are only allowed one 30k gift tax free. So when the house is signed over your going to have a hefty tax bill which you wouldn't be able to afford (if you cant save a deposit you cannot pay this tax bill)


Just wondering where the taxable liability is here. A parent can gift to their child up to eur 225,000 tax free.

Is there another tax liability ?

D3PO

henryd65 wrote: »

D3PO wrote: »

Its not as straight forward as that.

There is a taxable liability on this as you are only allowed one 30k gift tax free. So when the house is signed over your going to have a hefty tax bill which you wouldn't be able to afford (if you cant save a deposit you cannot pay this tax bill)


Just wondering where the taxable liability is here. A parent can gift to their child up to eur 225,000 tax free.

Is there another tax liability ?

My bad I read the table incorrectly. Your correct.

I Read the second column as the Disponer rather than the relationship to the disponer.

http://www.revenue.ie/en/tax/cat/thresholds.html

robanemma

Haha just came across this thread when clearing out my emails ..Thank god we didnt listen to any of yeer advice or we would of been up to ours eyes paying rent of 950 to 1k a month ...We bought a house for 85k after 3bed semi detached on a corner site with nobody beside us on one side .4 years paid off it already .Repayment of 545 a month for 20 years ,the house was put straight into my name on the deeds ..Weve since refurbished it to the value of 40k even though it wasnt necessary ..Estate agent called the other day to do a estimate said listen if your ever thinking about selling ill get you 200k for that house its immaculate ..Our dream was to always own our own house if we had to listen to this negative thread it might of never happened ...My dads mortgage is finished oon his own
and the only noose around his neck is how many times he can get to elland road for the football every year now that is a noose