Buying my parents' house

benjamin d

This is purely hypothetical at the moment, but may become necessary in future.
My parents both became unemployed a couple of years ago, and being in their fifties have found it impossible to get back to work. They claim that they're doing ok but I'm convinced they're struggling. There's still a mortgage on the house and I have a suspicion they're paying interest only.
Assuming there would be no objections by the siblings to my owning the house, I have a few things to query if I offered to buy it:

If the house is worth say 60k (small, older country house) and they have 40k to pay off the mortgage would it be as simple as me buying it off them, leaving them entirely free to live their lives out mortgage-free and with a small lump sum to get back on their feet?

I know that you're supposed to pay market rate even buying off a relative, but for a house worth 60k would you be allowed to pay say 50k for it,or what kind of wiggle room is there? Will I even get a mortgage for this?

I have just under 10k savings, and obviously want to buy a place myself down the line, so is it a stupid idea to lock up all of my money for potentially 40 years plus, as well as using my first time buyer's deposit break? This house will never be an asset to me as it's nowhere near where I live, requires a lot of modernisation,and will never be somewhere I'd want to live again, so this will be purely as a favour to them.

I have no idea what their actual mortgage is; if they're actually in negative equity is it still sensible to take the bulk of their debt (the house) and leave them with the remainder as a more manageable figure?

Mrs OBumble

OP if you do this, and have to pay the mortgage on it, then how are you going to be able to afford to pay rent to live somewhere else? I would be extremely surprised if the outstanding amount is as low as you mention. Are you really prepared to for-go your chance to buy a house for yourself for good, to do this for your parents?

What will happen if the house needs some serious maintenance - can you afford to pay for this? Even something like a new boiler or roof can cost thousands.

Why should you be the only sibling who shoulders this - why can't the others help out too?

benjamin d

That's exactly why I'm asking. I'm 99% sure it would be a bloody stupid idea but just thought I'd sound it out. My siblings wouldn't be in a position to help out if it came to it, one just bought their own place and the others are too young to have savings.
I'm just wondering if it came down to the bank threatening to take the house is it worthwhile to make the sacrifice or not? I have to say this is purely speculation on the worst case scenario.

dori_dormer

The repayments on a mortgage of 50k is only 250 euro or less. With interest.

What about simply paying the mortgage for them? If you have a decent job that is. Or splitting some of it with you siblings.
I wouldn't think it a good idea to saddle yourself with a mortgage and debt so early. What if you want to buy your own place in 5 yrs, and can't because you already have a mortgage, and also will need 20% deposit because you aren't a first time buyer any more?

Also what is the current market value of the property? Is it in a sellable area?

benjamin d

Yes the mortgage at the current value wouldn't be huge, it's definitely not worth more than 100k but probably less, and would be very difficult to sell as is. I have a suspicion that they remortgaged at the height of the boom so it may have been valued much higher then, in which case the whole thing is pointless. It's very hard to get info from them as pride gets in the way. They've been "borrowing" from us kids for a long time yet still pretend everything is hunky dory, it's seriously frustrating for us trying to help. The reason I'm asking about buying the house is that it feels like it's getting to the point where we need to sit them both down and insist they show us their finances. They're very unlikely to allow us to pay the mortgage, so if one of us bought the house they'd be less likely to feel that it's charity. But I'm not willing to throw my financial future away for it.

benjamin d

benjamin d wrote: »

Yes the mortgage at the current value wouldn't be huge, it's definitely not worth more than 100k but probably less, and would be very difficult to sell as is. I have a suspicion that they remortgaged at the height of the boom so it may have been valued much higher then, in which case the whole thing is pointless. It's very hard to get info from them as pride gets in the way. They've been "borrowing" from us kids for a long time yet still pretend everything is hunky dory, it's seriously frustrating for us trying to help. The reason I'm asking about buying the house is that it feels like it's getting to the point where we need to sit them both down and insist they show us their finances. They're very unlikely to allow us to pay the mortgage, so if one of us bought the house they'd be less likely to feel that it's charity. But I'm not willing to throw my financial future away for it.

You need to talk to them.

That should be the first step. Figure out what all the options are, then go through them with them.

Pride recovers, it's not an easy situation, but some open and honest discussion will give you far more answers than you'll be able to get on here.

Helping them with or paying the mortgage for them would be a far better option than buying it.

If they won't let you help with the repayments I don't see why they would look on you buying as being any different.

They can always leave you the house if they don't want you to lose out.

CorkMan_

You need to bite the bullet OP and have a serious talk with your parents. Until they admit there is a problem they probably won't take help. I had serious financial problems in '08/'09 and only when I finally admitted it to someone close to me could I start making changes etc. Pride is a horrible thing but it will help to talk to them.

Mrs OBumble

OP, something else to consider if managing their future eligibility for council housing.

If the house is reposessed, then they would be eligible for council assistance. But if they sell it voluntarily, then I understand that they would not be eligible. It may be better for the family overall for them to become bankrupt.

I'd suggest encouraging them to seek help from MABS, who are very experienced in these matters, and also impartial.

cassid

Your parents may not agree to this. So I would definitely sit down with them and tell them you want to help and take it from there. In the future you could have siblings saying "cheated us out of a house etc" ( see families fall apart over a few grand) so its best to avoid that situation. I saw it with two relatives, apart for 20 years over a few grand and only reunited when one was dying, so sad.

Lovely gesture on your behalf to want to help them now, they obviously raised a very caring child.

benjamin d

Thanks guys, yes it looks like a chat is necessary. Part of why I was asking about buying the place was to avoid things going sour in years to come. My father and his siblings bought their family home years ago and it turned nasty alarmingly quickly when they all left the financial side to trust. If I start paying the mortgage and get left the house because of that I can see noses getting knocked out of joint. For the record, I don't want the house at all, it's of no interest to any of the siblings at the minute and we've informally agreed that if we're ever left it between us to just sell up and get rid. As much as I love them and we all get along, I would NEVER get into serious financial arrangements on trust, family or not.
Parents eh, who'd have em!?

CollyFlower

How long ago did your parents buy the house?, if they're in their 50s and they're there, say (I'm just assuming, 15 - 20 years) if the house is only worth 60 thousand the mortgage should be manageable or should be paid off by now.

quad_red

cassid wrote: »

Your parents may not agree to this. So I would definitely sit down with them and tell them you want to help and take it from there. In the future you could have siblings saying "cheated us out of a house etc" ( see families fall apart over a few grand) so its best to avoid that situation..

This. If your parents have been 'borrowing' money from other siblings as well there may be expectations of repayment/inheritance etc. you're not aware of.

For your sake as much as everyone else involved there needs to be complete transparency and buy in.