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.