Buy the Family Home from my Mother as she is struggling with Mortgage, advice?

TRedmond

My mother remortgaged our family home in circa 2004 and has an o/s balance of €70,000 with EBS on a variable rate.

She has now started to accrue arrears (less than €1000.00) as her personal situation has changed due to illness and she can no longer work full time. EBS has already started sending her threatening letters and has entered her in to MARP.

I wish to now step in and help my Mother in either two ways and wish for your advice :

1. I obtain a mortgage myself and purchase the family home from my mother but it will be at an undervalue of €100,000 to the current market value of the home. I can only obtain a mortgage of €180k and the home is worth €280k.

However this is not my desired option for obvious reasons that I do not want to own a house where I have family residing and can't do with it as I please. My mother will continue to live there rent free until her death but I also have an elder brother who resides here and my mothers partner who is elderly resides here. Both my eldest brother and my mothers partner will contribute to rent and this will be used to pay the mortgage I take out and I will pay the shortfall.

2. I obtain a personal/business loan ( I am self employed) for the amount owing which my mother will need to ask EBS on, break fee included on the variable mortgage and pay this amount over a shorter 10 year period, therefore my mother remains owner of the home and it can still pass through the correct inheritance process for both my siblings and myself, affecting nobody that is also a tenant in the home.

Is there another method I am not considering? What would you advise on the above two options?

drunkmonkey

Are the brother and partner helping her with the mortgage at the moment?

Could you pay a portion of what's outstanding to make it manageable for the 3 of them.

Do you have now or hope to have a mortgage of your own in the future?

This would limit your future options.
I imagine that it would be difficult to get a mortgage on a house that you won't be living in but that others will have rights to.

Under declaration of the value would have tax implications - your mortgage limit might work if she transferred part as an inheritance and you bought the rest.

Are your brother and your mother's partner helping at all now or is she paying it all herself?

Could she downsize and live mortgage free somewhere else?

loyatemu

you owning the house where your brother and mother are paying rent seems a recipe for future strife. I'd hold off and see what happens with the MARP process - the bank are unlikely to be able to repossess over a 70K debt on a 280K house if she is still engaging with them.

TRedmond

Hi thank you for input. Yes they are both helping at the moment...

Sesame

Your first plan has too many potential pitfalls. Obviously there's impact on your own home. Plans in the future. High chance won't get any oer mortgage for your own house.
But also, your mother's partner and brother live there? And between the 3 of them, the mortgage can't be paid so you'd take it on?
I do t know the facts, but assuming your mother's partner has family. Say he dies, or they separate. What rights would his family aheb on the home?
Next, I'm making the assumption he's incapacitated or something if he can't afford one third of a mortgage payment. He can't afford to live on his own.
How long will he live if, for example, he is disabled and can't live independently? Are you going to own the home for the whole of his lifetime too? Or will you chuck him out?

Don't do it. I'd suggest finding ways of making the mortgage payments affordable. Check all social welfare options are claimed. Discuss with the partner. He must have some input or ideas if it's his home too.
Try the bank and look at options for restructuring if the payments are only slightly too high to manage. Can you loan the difference to your mother to carry her over for a while? Is there any future potential to increase income?
Do not put your self on the mortgage.

pablo128

Have they a spare room they can rent out?

TRedmond

Sorry I should have stated previously the reason I am trying to do this is because we cant afford to leave it with the process of MARP as my mother isn't in great health and struggles to sleep at night with worry of losing the house.

Ive recently moved back in to help matters and am considering converting the attic to a bedroom and en suite which will easy add 40k+ to the market value of the home, obviously I don't wish to do so with the fear of the banks repossessing.

So to confirm myself and brother contribute to rent and this goes towards the repayment but it is still now in arrears.

My wish is to clear he 70k for my mother in the most cost effective way without myself taking on a huge debt for a home I wont necessarily own without tenants being my family.

What would you do in my situation?

TRedmond

Sorry I should have stated previously the reason I am trying to do this is because we cant afford to leave it with the process of MARP as my mother isn't in great health and struggles to sleep at night with worry of losing the house.

Ive recently moved back in to help matters and am considering converting the attic to a bedroom and en suite which will easy add 40k+ to the market value of the home, obviously I don't wish to do so with the fear of the banks repossessing.

So to confirm myself and brother contribute to rent and this goes towards the repayment but it is still now in arrears.

My wish is to clear he 70k for my mother in the most cost effective way without myself taking on a huge debt for a home I wont necessarily own without tenants being my family.

What would you do in my situation?

Rackstar

Why don’t you pay the 1k arrears and then you and your brother pay rent to your mother and let her pay the mortgage?

The repayments can’t be that big on 70k?

Ghekko

Is your brother in a position to take out a loan as well as you - 35k each? If so then you could both try that option if you are the only 2 children . If you take out a loan yourself to pay the outstanding mortgage and down the track your mother dies and leaves the house between yourself and brother, you're left with a loan to pay off while he has half the house and no debt.

Jim2007

TRedmond wrote: »

So to confirm myself and brother contribute to rent and this goes towards the repayment but it is still now in arrears.

So how would you expect to pay back a loan or mortgage, if even after the two of you helping out it has still gone into arrears...

Trish56

Contact MABS/ABHAILE.

Jim2007

Jim2007 wrote: »

So how would you expect to pay back a loan or mortgage, if even after the two of you helping out it has still gone into arrears...

I'd guess the term would be much longer for a young man than for a woman near retirement giving a smaller monthly repayment.

murphaph

How much are the monthly repayments?

I can only second and third and fourth what others have said....find a way to make the existing payments.

Taking out a mortgage in the circumstances you outlined is a recipe for disaster and resentment.

SteM

TRedmond wrote: »

What would you do in my situation?

A mentioned I'd pay off the €1000 outstanding which will stop your mother worrying for now. Then I'd split the mortgage repayments into 3 with you, the boyfriend and your brother paying 'rent' to cover it every month.

Yawns

It'll cost more than 1k to convert the attic so why not just pay the 1k off the debt, that clears the stress of your mother's worry and then chip in with some payments until she gets back on her feet?

SteM

TRedmond wrote: »

and am considering converting the attic to a bedroom and en suite which will easy add 40k+ to the market value of the home

Don't count on this by the way, very often people think that work they do on their homes will add lots to the market value but really it doesn't, it just makes the property easier to sell.

Sleeper12

The simplist option is just to help her make the payments on the mortgage.

I don't see any advantage in option 2. You taking out a term loan over 10 years. I can't see how that would be better. You'll pay double the interest rate she's being charged now. If you want to pay it over 10 years I would think the cheaper option would be to keep the mortgage with the lower interest rate & just pay more off the capital each month. You can do this within 10 years but it'll work out a lot cheaper than a 10 year term loan

Sleeper12

TRedmond wrote:

Ive recently moved back in to help matters and am considering converting the attic to a bedroom and en suite which will easy add 40k+ to the market value of the home, obviously I don't wish to do so with the fear of the banks repossessing.

Sometimes an attic conversion does not add anything to the market value of the property. I don't believe that it would add anything near 40k to the value of the property