Should I help my parents out by giving them money for mortgage?

loopysilvette

So I have come into money by selling a property I bought in the UK a few years ago- it was supposed to be a long term investment to act as my pension but being a 'landlord' was way more hassle than I wanted. 
So I have about €25k sitting there waiting to be invested. And I want to give it to my parents for them to put it towards their mortgage- they were very stupid a good few years back and remortgaged and are now left owing €45k+ on their property. 
In my mind, this will take serious pressure off them or even allow them to pay their mortgage back in half the time. 
But of course- this is my investment money and will want it back as my nest egg/pension fund after they pass away. I haven't even thought about interest or inflation yet. I've spoken to my sister, only other sibling, who is fine with me 'taking more inheritance' in order to take the pressure off the parents now,
But I need to know the legalities and ins and outs of all of this before I offer it to my parents. 
What is the best way to do this without them being stung for tax on receiving the 'gift' and then me being stung twice when I need to pay tax on my 'inheritence' even though really this is a loan which will not need to be paid back until they die (morbid!) 
Can anyone offer any advice on this, or even let me know where to start looking to read up/contact people? 
TIA

nuckeythompson

Buy into their property

qwertz

I've spoken to my sister, only other sibling, who is fine with me 'taking more inheritance' in order to take the pressure off the parents now,

Hi! I am going through this very thing with my siblings at the moment. A will can be changed at any time and some people have very selective memory. I don't know you our your family but once it comes to money then a lot of people turn into complete youknowwhats. Make sure you have a bulet-proof agreement in place before you walk into any "agreements" with your family.

Like the previous poster suggested, take a stake in the property. Again, make sure you know all legal details.

nuckeythompson

Or have it in the will that you loaned 25k. Inheritance tax threshold is much higher now.
The above poster is correct. Once money is involved it can get nasty. Trust me, I know

Pkiernan

Loan them the money.

Taking a stake now in the property could affect status of their family home as the principal primary residence.

nuckeythompson

How old are your parents?

loopysilvette

Thanks Everyone. 
Yes I do want to make sure its all above board and have explicitly told my sister that she would need to be in on the signing of the contracts to ensure that I'm not stung on the back end... My parents have no clue yet as to my plans just my sister. 
My parents are 63 and 64 and the bank allowed them to remortgage until my dad is 72 (9 years left on Mortgage) They have full mortage protection too. To be honest, the stress my dad is under I doubt he will last that long (even more morbid)
It just feels like the right thing to do, instead of having the cash sitting there making me nothing where it is. 
And I dont think I want a 'stake' in their house... would mean that any liability would fall on me in the event anything happens to them. But then again, as Ive mentioned, I dont know what is the best option. 
Who do I look to to get details of the legalities around this? A mortgage advisor, or a financial advisor? A solicitor or a tax accountant? I honestly haven't a clue where to start.

pilly

loopysilvette wrote: »

Thanks Everyone.
Yes I do want to make sure its all above board and have explicitly told my sister that she would need to be in on the signing of the contracts to ensure that I'm not stung on the back end... My parents have no clue yet as to my plans just my sister.
My parents are 63 and 64 and the bank allowed them to remortgage until my dad is 72 (9 years left on Mortgage) They have full mortage protection too. To be honest, the stress my dad is under I doubt he will last that long (even more morbid)
It just feels like the right thing to do, instead of having the cash sitting there making me nothing where it is.
And I dont think I want a 'stake' in their house... would mean that any liability would fall on me in the event anything happens to them. But then again, as Ive mentioned, I dont know what is the best option.
Who do I look to to get details of the legalities around this? A mortgage advisor, or a financial advisor? A solicitor or a tax accountant? I honestly haven't a clue where to start.

I would suggest a solicitor, I'm sure they've come across situations like this before.

pacelut

I can't believe how cold you people are! OP mentions the father is under big stress that might take few years off his life and you people think paying a solicitor is the way forward.
How much money your parents spent with you as a kid growing up? What sacrifices did they made and how many times they put you first before their needs? 25k is and it isn't a large sum considering the positive of reducing the stress on your older parents.
There is a saying, what goes around comes around (or karma is a b...). Let's hope your kids will be willing to help you all when you are of old age, and not follow your current advise you all are giving to the OP!

ceegee

pacelut wrote: »

I can't believe how cold you people are! OP mentions the father is under big stress that might take few years off his life and you people think paying a solicitor is the way forward.
How much money your parents spent with you as a kid growing up? What sacrifices did they made and how many times they put you first before their needs? 25k is and it isn't a large sum considering the positive of reducing the stress on your older parents.
There is a saying, what goes around comes around (or karma is a b...). Let's hope your kids will be willing to help you all when you are of old age, and not follow your current advise you all are giving to the OP!

People are saying consult a solicitor to make sure he does it in a way that doesnt end up stinging the op or their parents for a big tax bill. Nobody has said not to give them the money

Eimee90

pacelut wrote:

I can't believe how cold you people are! OP mentions the father is under big stress that might take few years off his life and you people think paying a solicitor is the way forward. How much money your parents spent with you as a kid growing up? What sacrifices did they made and how many times they put you first before their needs? 25k is and it isn't a large sum considering the positive of reducing the stress on your older parents. There is a saying, what goes around comes around (or karma is a b...). Let's hope your kids will be willing to help you all when you are of old age, and not follow your current advise you all are giving to the OP!

Think you read this completely wrong. People are advising a solicitor so that the parents arent stung by the investment either

pacelut

pacelut wrote: »

I can't believe how cold you people are! OP mentions the father is under big stress that might take few years off his life and you people think paying a solicitor is the way forward.
How much money your parents spent with you as a kid growing up? What sacrifices did they made and how many times they put you first before their needs? 25k is and it isn't a large sum considering the positive of reducing the stress on your older parents.
There is a saying, what goes around comes around (or karma is a b...). Let's hope your kids will be willing to help you all when you are of old age, and not follow your current advise you all are giving to the OP!

At least your heart is in the right place

Bigus

Would there be any chance the mortgage company would settle for less than the actual 45 outstanding if they got an offer of 25 or 30 now paid immediately ?

I'd make this offer before just paying down 25 k without any bonus to your parents.

So I'd say get your parents talking to them and see if they can negotiate an early discounted exit.

pacelut

Apologies if I was mistaken. A quick search on citizen information website will give you the answers.

http://www.citizensinformation.ie/en/money_and_tax/tax/capital_taxes/capital_acquisitions_tax.html#ld5162

listermint

Bigus wrote: »

Would there be any chance the mortgage company would settle for less than the actual 45 outstanding if they got an offer of 25 or 30 now paid immediately ?

I'd make this offer before just paying down 25 k without any bonus to your parents.

So I'd say get your parents talking to them and see if they can negotiate an early discounted exit.

I'd be super surprised if they went for that given the market boyancey. Only ones offering that are seeking to exit the market stat.

Bigus

listermint wrote: »

I'd be super surprised if they went for that given the market boyancey. Only ones offering that are seeking to exit the market stat.

Not necessarily,no harm in asking ,mortgagees are quite old near the end of term .
Plus we don't know if it is one of the banks trying to exit the market or tidying up their books from the information supplied.

Trish56

You definitely need to contact a Solicitor who will draw up an agreement with your parents and sibling that you are repaid the 25k plus interest when the property is eventually sold/inherited.

Your parents need to write to Mortgage Company and ask what effect paying 25k off the principal would have on (1) Monthly repayments and (2) The outstanding term.
If your parents are currently on a fixed rate they may not be able to pay a lump sum off the principal until the fixed term expires or pay a penalty.

Perhaps your sibling and you might consider paying the reduced mortgage monthly repayments to reduce the stress on your parents. Also are any of your parents due a tax free lump sum from their pensions (if any) that they can clear the o/s mortgage when they retire.

Fair dues to you to want to help your parents.

pilly

Bigus wrote: »

Not necessarily,no harm in asking ,mortgagees are quite old near the end of term .
Plus we don't know if it is one of the banks trying to exit the market or tidying up their books from the information supplied.

Yes and did I hear the other day that some vulture funds were offering up to 40% of loans? Probably loans in distress though?

scheister

give the money of course, but contact a solicitor and tax adviser and make sure it is all done in a way that will not put undue tax's on you or your parents. If it is done wrong it can be a very expensive mistake.

There are ways to structure this where they should be little or no tax for both you and your parents.

loopysilvette

Thanks so much to everyone who has responded. 
I called the bank about the early settlement and they nearly laughed me off the phone! So What is due on the mortgage is what is due- thanks for the suggestion though. 
Ive also been in contact with a solicitor who has said I can do it any which way but he advised me to contact a tax advisor to be safe. And Ive also been told to look into their entitlements/endowments. 
Sometimes I wish I never grew up.... All seems more hassle than its worth. Although shaving 6 years of a mortgage for them will be something else!

lawred2

pacelut wrote: »

I can't believe how cold you people are! OP mentions the father is under big stress that might take few years off his life and you people think paying a solicitor is the way forward.

wut

Killergreene

25k is nothing. If ye think that is big money lads ye are living in the clouds.

lawred2

Bigus wrote: »

Would there be any chance the mortgage company would settle for less than the actual 45 outstanding if they got an offer of 25 or 30 now paid immediately ?

I'd make this offer before just paying down 25 k without any bonus to your parents.

So I'd say get your parents talking to them and see if they can negotiate an early discounted exit.

It's only 45k - you would have better chance of a write down if they were on the hook for 45m

lawred2

Killergreene wrote: »

25k is nothing. If ye think that is big money lads ye are living in the clouds.

that's not really helpful

However unless this is a one bed cottage in Leitrim I can't see how a 25k stake in the house would amount to much more than 10% of the value of the house.

In Dublin or Cork etc it could be much less.

Do it as an index linked loan. A solicitor is surely best placed to advise how to formalise something like this.

loopysilvette

I Just spoke to a tax accountant... Parents are part of TAX threshold B for inheritance/gift so he thinks they are entitled to get 32K from me without any implications. 
(For those who are interested....)

Armchair Andy

loopysilvette wrote:

I Just spoke to a tax accountant... Parents are part of TAX threshold B for inheritance/gift so he thinks they are entitled to get 32K from me without any implications. (For those who are interested....)

Nice to know. Just hope too much of the 25k isn't swallowed up by interest fees on the outstanding mortgage.

lawred2

Armchair Andy wrote: »

Nice to know. Just hope too much of the 25k isn't swallowed up by interest fees on the outstanding mortgage.

Yeah make sure that there are no penalties for lump sum repayment!

@OP are your parents on a variable rate?

If they are on a fixed that precludes over payments - repaying 25k could result in a nasty bite.

loopysilvette

lawred2 wrote: »

Armchair Andy wrote: »

Nice to know. Just hope too much of the 25k isn't swallowed up by interest fees on the outstanding mortgage.

Yeah make sure that there are no penalties for lump sum repayment!

@OP are your parents on a variable rate?

If they are on a fixed that precludes over payments - repaying 25k could result in a nasty bite.

No Luckily I checked all of this... They are on the SVR as their fix ended a year or two ago. So I spoke to the bank and there are no early repayment charges.
Looks like paying this can cut 5 years off their mortgage.

Cute Hoor

You are entitled to give each of your parents (or indeed anybody) up to €3,000 per annum with no tax implications.

The trickier bit is when it comes to your inheritance.

Fair play to you for wanting to help them, good karma awaits.

Peregrinus

Definitely a solicitor, and in fact your parents will need a (different) solicitor too. Transactions between connected parties; possibility of undue influence; need to demonstrate that your parents had independent, professional advice in whatever deal they make with you.

Your choices are:

A. Loan to your parents, to be used to reduce mortgage indebtedness. Repayable on death of the second of your parents which, NB, could easily be 25 years hence (or repayable on earlier sale of the house?). You'd need to think about whether you were charging any interest on this loan. If yes, that's potentially a very great cost to you; making an interest-free loan for 25 years is not a good way to save for retirement. If no, however, it doesn't greatly improve your parents financial position; they just owe money to you rather than to the bank, but they still owe.

B. You buy a stake in the house, and they apply the sale proceeds to reduce the mortgage. I know you don't want to do this, but for the sake of your retirement fund you may need to think about it. It has tax complications for you and your parents, and they need to be explored carefully. But it does offer you some long-term return; you won't (presumably) charge your parents rent while they live in a house which you part-own, but when the house is sold you will participate in any appreciation in the value of the house since you bought your share.

nhunter100

loopysilvette wrote:

My parents are 63 and 64 and the bank allowed them to remortgage until my dad is 72 (9 years left on Mortgage) They have full mortage protection too. To be honest, the stress my dad is under I doubt he will last that long (even more morbid) It just feels like the right thing to do

You feel you're dad's life maybe shortened by the mortgage, yet you're dithering whether you should help or not. Un*******believe able. I can't believe the priorities of some people in this world.

alig123aileen

Fair play to you for helping your parents as most people would want to do. I know you rang your bank about reducing amount outstanding in favour of immediate payment and they laughed you out of it. This is not a formal request you must put in it writing to them. At your parents age the Financial Regulator would frown at any bank giving your parents a loan where repayments were past age 70 (they are deemed to be 'vulnerable people') and there are very strict rules about this so your parents are informed of this at the outset and have to sign saying they did not receive any advice in this regard from the bank (this is called 'execution only' and they must sign up to this however banks have been hit with thousands of claims where they did not get 'vulnerable persons't o sign up to this clause). It is up to the bank to prove they highlighted the risks to your parents and to show documentary evidence that they did and that they complied with the Regulator rules. I would talk to your parents and see if they are happy to write to the bank and ask for a copy of the 'Know your customer Documentation' and application form they signed for this loan and the financial statements they completed in order for the bank to consider the loan . Also ask them for a copy of the audio call you made to them asking them to accept a reduced payment. Say you intend to take your case to the Financial Services Ombudsman. Conclude in the letter that you do not need above if they will consider an immediate payment in full and final settlement of the mortgage. I wouldn't mention 25k as they may settle for less! I think you will find they will be very anxious to sort the matter. I have background in Financial Services Compliance and Legal so I am happy to help you with drafting the letter or talking to your parents or any way you think I can help. I don't charge for this service just PM me on boards.ie. I have helped over 100 people with bank debt and other debts and in almost all cases have ben successful. I empathise fully with the awful situation you and your parents find themselves in and its great they have your support. My dad died age 63 because of the stress of debt from a bank. The banks are simply not worth it and when challenged in a professional comprehensive knowledgeable way and when they know the documentation is not in place to cover them off I think you will find they will back off and concede very quickly. And on a separate note I abhor those who come on boards.ie just to judge attack and not to respond in a meaningful helpful empathic way. This 'Wild Atlantic Rage' that permeates our country especially online must be I believe challenged at every juncture. I hope whatever decision you make is the right one to safeguard your parents health and longevity.

pilly

alig123aileen wrote: »

Fair play to you for helping your parents as most people would want to do. I know you rang your bank about reducing amount outstanding in favour of immediate payment and they laughed you out of it. This is not a formal request you must put in it writing to them. At your parents age the Financial Regulator would frown at any bank giving your parents a loan where repayments were past age 70 (they are deemed to be 'vulnerable people') and there are very strict rules about this so your parents are informed of this at the outset and have to sign saying they did not receive any advice in this regard from the bank (this is called 'execution only' and they must sign up to this however banks have been hit with thousands of claims where they did not get 'vulnerable persons't o sign up to this clause). It is up to the bank to prove they highlighted the risks to your parents and to show documentary evidence that they did and that they complied with the Regulator rules. I would talk to your parents and see if they are happy to write to the bank and ask for a copy of the 'Know your customer Documentation' and application form they signed for this loan and the financial statements they completed in order for the bank to consider the loan . Also ask them for a copy of the audio call you made to them asking them to accept a reduced payment. Say you intend to take your case to the Financial Services Ombudsman. Conclude in the letter that you do not need above if they will consider an immediate payment in full and final settlement of the mortgage. I wouldn't mention 25k as they may settle for less! I think you will find they will be very anxious to sort the matter. I have background in Financial Services Compliance and Legal so I am happy to help you with drafting the letter or talking to your parents or any way you think I can help. I don't charge for this service just PM me on boards.ie. I have helped over 100 people with bank debt and other debts and in almost all cases have ben successful. I empathise fully with the awful situation you and your parents find themselves in and its great they have your support. My dad died age 63 because of the stress of debt from a bank. The banks are simply not worth it and when challenged in a professional comprehensive knowledgeable way and when they know the documentation is not in place to cover them off I think you will find they will back off and concede very quickly.

Absolutely brilliant idea and excellent points. My own father lost 25k in BOI shares because he was talked into them by someone in his local branch. Stress of it still affects him to this day.

He refuses to do anything about it even though I genuinely feel they were way out of order to sell them to him when he'd no knowledge of financial instruments.

He just doesn't want the embarrassment of admitting he hadn't a clue what he was doing.

daheff

Fair play to you OP. Its a nice thing to want to do to help your parents out.


As I see it, you have a couple of options


1- Lump sum payment off mortgage. Then this either reduces the term or reduces the repayment amount. If it were me, i'd look to reduce the monthly repayment (save the extra each month vs current repayment & use that to make another lump sum in a couple of years).

2-Use the annual threshold of 3K tax free to gift your parents (each) and let them use that to pay monthly repayments. ***Some agreement would need to be made with your sibling that the first 25k of the proceeds of sale of property goes to you, though. Kicker here is that there may be some conflict then with revenue over the annual gift.

Just remember once the money is repaid to the bank it wont be loaned back to your parents. So make sure that everything isn't paid back straightaway to the bank as you'll have no rainy day fund left.


On a side note, I'd be querying with the Financial Services Ombudsman about the bank loaning money to your parents until they are 72. How does the bank expect them to repay the loan when they are in retirement? It would seem highly unusual (& suspicious) to have a loan like that.

lawred2

nhunter100 wrote: »

You feel you're dad's life maybe shortened by the mortgage, yet you're dithering whether you should help or not. Un*******believe able. I can't believe the priorities of some people in this world.

:rolleyes:

daheff

alig123aileen wrote: »

This is not a formal request you must put in it writing to them. At your parents age the Financial Regulator would frown at any bank giving your parents a loan where repayments were past age 70 (they are deemed to be 'vulnerable people') and there are very strict rules about this so your parents are informed of this at the outset and have to sign saying they did not receive any advice in this regard from the bank (this is called 'execution only' and they must sign up to this however banks have been hit with thousands of claims where they did not get 'vulnerable persons't o sign up to this clause). It is up to the bank to prove they highlighted the risks to your parents and to show documentary evidence that they did and that they complied with the Regulator rules. I would talk to your parents and see if they are happy to write to the bank and ask for a copy of the 'Know your customer Documentation' and application form they signed for this loan and the financial statements they completed in order for the bank to consider the loan . Also ask them for a copy of the audio call you made to them asking them to accept a reduced payment. Say you intend to take your case to the Financial Services Ombudsman. Conclude in the letter that you do not need above if they will consider an immediate payment in full and final settlement of the mortgage. .

Do not say this to them. This could be construed as blackmail.

Either press ahead with the FSO or not, but don't threaten it if you don't get your way.

Koptain Liverpool

nhunter100 wrote: »

You feel you're dad's life maybe shortened by the mortgage, yet you're dithering whether you should help or not. Un*******believe able. I can't believe the priorities of some people in this world.

Read the bloody thread before making foolish posts.

nhunter100

Koptain Liverpool wrote:

Read the bloody thread before making foolish posts.

I did read it thanks for your input.

Koptain Liverpool

nhunter100 wrote: »

I did read it thanks for your input.

Did you?

Right then.

You accuse the OP of 'dithering' about whether or not to help his parents:
Please identify which of his posts display this.

The OP is asking for advice about the best way to go about helping his parents: Yet you "can't believe the priorities of some people in this world"

Mezcita

Killergreene wrote: »

25k is nothing. If ye think that is big money lads ye are living in the clouds.

Good for you Jay Z.

nhunter100

Koptain Liverpool wrote:

You accuse the OP of 'dithering' about whether or not to help his parents: Please identify which of his posts display this.

Quite simple actually, again I repeat he refers to the possible shortening of his father's life but shows imo more concern in protecting his 25k . Personally if I felt my parents were under such stress I would have helped them already instead of seeking the opinion of randomers on the internet but that's just me. You take care now.

Koptain Liverpool

nhunter100 wrote: »

Quite simple actually, again I repeat he refers to the possible shortening of his father's life but shows imo more concern in protecting his 25k . Personally if I felt my parents were under such stress I would have helped them already instead of seeking the opinion of randomers on the internet but that's just me. You take care now.

It's not quite simple though is it. It's not like his parents need the money tomorrow for a life-saving operation.

Are you saying that he has no right to seek advice about the best way to help his parents out? He is planning to help and is simply seeking advice of those more knowledgeable regarding the logistics.

Why do you end your replies with childish comments like 'you take care now'?

nhunter100

Koptain Liverpool wrote:

Why do you end your replies with childish comments like 'you take care now'?

Would you rather I told you to 'get stuffed'? Being polite is not an effort to me. Have a nice day. Is that better?

lawred2

lol

'you take care now' has rarely ever been used in a polite context

nhunter100

Koptain Liverpool wrote:

Are you saying that he has no right to seek advice about the best way to help his parents out? He is planning to help and is simply seeking advice of those more knowledgeable regarding the logistics.

Are you attempting to put your own spin on what I said?Please show where I alluded to the op having no right to seek advice? Or are you just making stuff up. Actually don't reply, I'm finished replying to you.

nhunter100

lawred2 wrote:

'you take care now' has rarely even been used in a polite context

I can only speak for myself. I use it all the time. Anyone wants to take it as an insult that's their problem. I won't lose sleep over it.

KCross

nhunter100 wrote: »

You feel you're dad's life maybe shortened by the mortgage, yet you're dithering whether you should help or not. Un*******believe able. I can't believe the priorities of some people in this world.

Do you see bad everywhere you look or what?! :rolleyes:

The OP is looking to help his parents, not dithering on whether he will or not, and simply wants advise on the best way to do that.

Simply waltzing into the bank with a 25k cheque saying "knock that off my Dad's mortgage" isnt how its done. He is seeking advise on how to proceed as there are legal and tax issues that have to be allowed for, otherwise you could end up diluting the effect of the 25k. Its in everyones interest, including his Dads, that the max value of the 25k is achieved.

You make it sound like its for an operation and he is deciding whether he will help or not!

Koptain Liverpool

nhunter100 wrote: »

Are you attempting to put your own spin on what I said?Please show where I alluded to the op having no right to seek advice? Or are you just making stuff up. Actually don't reply, I'm finished replying to you.

Oh wise up you twat. You're just making yourself look worse and worse.

b4bmm

An absolute plonker. Ruining a good thread because he/she cant give up the charade of how wrong they were!! A true keyboard warrior.

Nody

Mod:
nhunter100 don't post in this thread again; you've caused enough disruption with your aggressive style as it is. To everyone else; no more replies to his posts as he's not allowed to respond to you.