using parents house to get funds to buy own house

Amadan90

Hi,
I'm just wondering is it possible to use parents home (there is no mortgage on it) to somehow fund buying my own house?

If there was way to free up funds to buy a house. i would rather have to pay of a mortgage than to rent a house for a few years while saving to get a mortgage from scratch.

in terms of value, I would estimate parents home is worth about €250k and i would be looking to buy a house/apartment worth €100k at most.

PinotNero

Amadan90 wrote: »

Hi,
I'm just wondering is it possible to use parents home (there is no mortgage on it) to somehow fund buying my own house?

If there was way to free up funds to buy a house. i would rather have to pay of a mortgage than to rent a house for a few years while saving to get a mortgage from scratch.

in terms of value, I would estimate parents home is worth about €250k and i would be looking to buy a house/apartment worth €100k at most.

You should ask them OP tbh.

Thoie

They could remortgage their house and give you the money. There'd be gift/inheritance tax implications in that, plus they run the risk of losing their house.

They could put their house as collateral on your mortgage, which again opens them up to the risk of losing their house if you default on the mortgage.

Yes, there are ways to do it. It's not something to be done lightly. Other implications could be if either of them needed a nursing home later under the Fair Deal. Both you and your parents should get independent legal/financial advise before signing anything.

Claw Hammer

It happened frequently in the years before 2008 that parents re-mortgaged their own houses and passed the money on to their offspring to purchase a property and often guaranteed the loan on the new property. In many cases this led to serious problems for the parents when they couldn't pay for the new loan. The banks are very wary of such transactions now. It would depend on several factors, not least your parents age and income as well as your age and income, the condition of your parents house and the type of property you propose purchasing.
I would think your prospects are slim in any event.

Amadan90

Thoie wrote: »

They could remortgage their house and give you the money. There'd be gift/inheritance tax implications in that, plus they run the risk of losing their house.

They could put their house as collateral on your mortgage, which again opens them up to the risk of losing their house if you default on the mortgage.

Yes, there are ways to do it. It's not something to be done lightly. Other implications could be if either of them needed a nursing home later under the Fair Deal. Both you and your parents should get independent legal/financial advise before signing anything.

would i be right in saying,
remortgage would probably release extra funds than needed?
would it work that if i remortgaged parents house just to release enough funds to purchase the other house outright. then the payments would be a lot lower?

and if used as collateral, the idea would be the mortgage would be on the €100k house which would be covered by a house worth €250k

ED E

No the mortgage would be on 100K of the value of the 250K house. Then youd be a cash buyer for the 100K house (done and dusted per say).

If you were to get the mortgage for the new house you'd have to meet deposit and income requirements. Thats what you're trying to avoid in the OP.

Amadan90

ED E wrote: »

No the mortgage would be on 100K of the value of the 250K house. Then youd be a cash buyer for the 100K house (done and dusted per say).

If you were to get the mortgage for the new house you'd have to meet deposit and income requirements. Thats what you're trying to avoid in the OP.

How likely would it be to do something like that?

Do you want to encumber your parents with the stress of having to pay a mortgage possibly into their retirement?

Stand on your own two legs, if you haven’t the funds for deposit or capacity to pay, wait until you have.

Samuel T. Cogley

I'm assuming the 90 is your username is your DOB. You might have the issue that the only mortgage your parents can get is a rather short one. You'd all also have to tell quite a few porkies to get it over the line. There's no way of boosting your salary to c.26K no?

Amadan90

Dav010 wrote: »

Do you want to encumber your parents with the stress of having to pay a mortgage possibly into their retirement?

Stand on your own two legs, if you haven’t the funds for deposit or capacity to pay, wait until you have.

The idea is i would pay the mortgage, I would presume the mortgage repayments would be about the same as i would pay in rent but with the added benefit of it being used on something i will own.

Twenty Grand

I think you need to look at your own circumstances.

For a comfortable 100k max mortgage you'll need 15k in the bank (10 for 10% and 5 for solicitor, fees etc) and earning ~30k pa.

If you can't manage that, how do you propose paying your parents back while paying bills and upkeep on your property?

Claw Hammer

Amadan90 wrote: »

would i be right in saying,
remortgage would probably release extra funds than needed?
would it work that if i remortgaged parents house just to release enough funds to purchase the other house outright. then the payments would be a lot lower?

and if used as collateral, the idea would be the mortgage would be on the €100k house which would be covered by a house worth €250k

You can't re-mortgage your parents house. Only your parents can. If your parets were in their late 40's with secure civil service type jobs, bulletproof pesions and no major expenses, such as educating other children, looming it is one thing, but if they are in their late 50's or older the it is sadistic to expect them to re-mortgage their house.

Amadan90

Samuel T. Cogley wrote: »

I'm assuming the 90 is your username is your DOB. You might have the issue that the only mortgage your parents can get is a rather short one. You'd all also have to tell quite a few porkies to get it over the line. There's no way of boosting your salary to c.26K no?

yes 90 is DOB,
Why would lies need to be told? am i that innocent (or ignorant depending on how you look at it)

Amadan90

Twenty Grand wrote: »

I think you need to look at your own circumstances.

For a comfortable 100k max mortgage you'll need 15k in the bank (10 for 10% and 5 for solicitor, fees etc) and earning ~30k pa.

If you can't manage that, how do you propose paying your parents back while paying bills and upkeep on your property?

The 15k in the bank is the biggest problem.
the monthly payments wouldn't be that much of a problem.

Samuel T. Cogley

Amadan90 wrote: »

yes 90 is DOB,
Why would lies need to be told? am i that innocent (or ignorant depending on how you look at it)

Actually if you're buying outright you should be okay. I just had a deposit situation in my own head, sorry.

Amadan90

Claw Hammer wrote: »

You can't re-mortgage your parents house. Only your parents can. If your parets were in their late 40's with secure civil service type jobs, bulletproof pesions and no major expenses, such as educating other children, looming it is one thing, but if they are in their late 50's or older the it is sadistic to expect them to re-mortgage their house.

explain to me the sadistic part? are you referring to the stress a mortgage would have on them, or you mean sadistic for another reason?

Samuel T. Cogley

Amadan90 wrote: »

explain to me the sadistic part? are you referring to the stress a mortgage would have on them, or you mean sadistic for another reason?

TBH I think people are getting a little carried away. I assume your parents are sane, sensible people capable of making their own decisions. You'd want to make sure they can afford the mortgage though in case you're hit by a bus etc. Factoring in life assurance wouldn't be a bad move.

Clareman

If the monthly repayments aren't an issue for you why not start saving the €15k deposit now? Assuming you can afford €1,000 a month, which would be the minimum amount required to maintain an apartment (mortgage, taxes, bills, etc) , then you'll have the deposit in a little over a year, if you can't do the €1,000 a month they you should wonder if you can afford a place on your own.

Samuel T. Cogley

Clareman wrote: »

If the monthly repayments aren't an issue for you why not start saving the €15k deposit now? Assuming you can afford €1,000 a month, which would be the minimum amount required to maintain an apartment (mortgage, taxes, bills, etc) , then you'll have the deposit in a little over a year, if you can't do the €1,000 a month they you should wonder if you can afford a place on your own.

Possibly stuck paying a rent much higher than that, although I do wonder if they can buy for €100K.

Ursus Horribilis

Why are you looking to go down this road? Is your job poorly paid? Can you not save a deposit yourself?

Clareman

Samuel T. Cogley wrote: »

Possibly stuck paying a rent much higher than that, although I do wonder if they can buy for €100K.

Fair point, the thoughts of putting parents at risk for a loan gives me chills though.

Op, would it be an option to stay with your parents for a while to save on rent? Would they be able to give you a "loan" of the €15k for the deposit, would you be able to afford the cost of maintaining your own place?

Amadan90

Ursus Horribilis wrote: »

Why are you looking to go down this road? Is your job poorly paid? Can you not save a deposit yourself?

I'm just looking at options. I was asking how possible it it. A few people seem to think i'd be putting a lot of pressure on my parents. I understand that could be a concern but if the truth was that it was my parents idea or they were the ones wondering if they could help me in this way. would they then criticize my parents for some reason?

Ursus Horribilis

Have you any savings? Do you have a job that pays enough to cover a mortgage and the myriad of other expenses that home ownership entails?

Amadan90

Clareman wrote: »

Fair point, the thoughts of putting parents at risk for a loan gives me chills though.

Op, would it be an option to stay with your parents for a while to save on rent? Would they be able to give you a "loan" of the €15k for the deposit, would you be able to afford the cost of maintaining your own place?

The loan for the deposit is the other option i'm thinking about. I'm just trying to get as much information or ideas as possible.

I am merely trying to think outside the box.

Amadan90

Ursus Horribilis wrote: »

Have you any savings? Do you have a job that pays enough to cover a mortgage and the myriad of other expenses that home ownership entails?

I only have a small amount of savings. the monthly bills/mortgage would be covered as well as the general upkeep of my own home.

it's the lump sum deposit as well as maybe the background checks on bank accounts that would lead me to think of other options.

but most seem to think i should sit tight for another couple of years and then just go it alone.

Amadan90

Amadan90 wrote: »

The 15k in the bank is the biggest problem.
the monthly payments wouldn't be that much of a problem.

Not really overly inspiring. Your parents would IMO be off their heads to go guarantor fit you in any capacity.

Ursus Horribilis

I'm old enough to remember the last property bubble in the 2000s. This all sounds depressingly familiar. People borrowing deposits from credit unions that weren't in the Irish Credit Bureau. Ads running on TV for banks encouraging parents to help get their kids onto the property ladder using their own homes. People doctoring their payslips so that they looked like they were earning more than they did. Then the whole thing came crashing down.

jlm29

A few people have pointed this out, but I don’t think you’ve addressed it. Putting risk and what people think you should or shouldn’t do aside.
If your parents go to the bank and ask to remortgage their house, they will be assessed like anyone else looking for a mortgage. You cannot remortgage their house because you don’t own it. Their age, income, dependants etc will be examined. The bank won’t give them money that they can’t pay back (on paper) themselves. I presume that if you’re 29, your parents are at least 59? If they were 59, for example, and If one of them is in full time employment, I’m pretty sure that the most they will get is a 6 year mortgage, which, I’d imagine would make your repayments unmanageable, or else you wouldn’t be floating this idea, you’d be saving up a deposit.

The bank will not give them money based on your income, regardless of the fact that you intend to pay it off. The same stands if you look to buy a house and they want to go guarantor.

Amadan90

jlm29 wrote: »

A few people have pointed this out, but I don’t think you’ve addressed it. Putting risk and what people think you should or shouldn’t do aside.
If your parents go to the bank and ask to remortgage their house, they will be assessed like anyone else looking for a mortgage. You cannot remortgage their house because you don’t own it. Their age, income, dependants etc will be examined. The bank won’t give them money that they can’t pay back (on paper) themselves. I presume that if you’re 29, your parents are at least 59? If they were 59, for example, and If one of them is in full time employment, I’m pretty sure that the most they will get is a 6 year mortgage, which, I’d imagine would make your repayments unmanageable, or else you wouldn’t be floating this idea, you’d be saving up a deposit.

The bank will not give them money based on your income, regardless of the fact that you intend to pay it off. The same stands if you look to buy a house and they want to go guarantor.

that's all im doing, floating an idea.
you do address plenty of good points. now my question is, what if they put their own house in my name? would that solve problems or make more problems?

Clareman

Your parents could remortgage their house to give you the funds, the risks involved as well as the tax implications would be a nightmare, I heard somewhere that banks won't give you a mortgage beyond your retirement ages so assuming your parents are 50 then chances are the longest duration mortgage they'd get would be 15 years which would be large repayments I'd imagine.

If your parents are on board, how about they buy the property you are thinking of getting and you "rent" it back off them for the mortgage repayments, if you don't make the repayments then the bank take back the apartment.

Stheno

Amadan90 wrote: »

I only have a small amount of savings. the monthly bills/mortgage would be covered as well as the general upkeep of my own home.

it's the lump sum deposit as well as maybe the background checks on bank accounts that would lead me to think of other options.

but most seem to think i should sit tight for another couple of years and then just go it alone.

What would show up in check of your bank account?

Clareman

Ursus Horribilis wrote: »

I'm old enough to remember the last property bubble in the 2000s. This all sounds depressingly familiar. People borrowing deposits from credit unions that weren't in the Irish Credit Bureau. Ads running on TV for banks encouraging parents to help get their kids onto the property ladder using their own homes. People doctoring their payslips so that they looked like they were earning more than they did. Then the whole thing came crashing down.

A friend of mine got a mortgage on a 3 bedroom house by saying that he was going to rent out 2 of the rooms, he didn't have any intention of doing so but the advisor told him to write down that he was going to do so because otherwise he wouldn't get the loan, sh1t like that is coming back big time.

Amadan90

Stheno wrote: »

What would show up in check of your bank account?

small deposits weekly to betting site (during the football season)
I've read before they don't like to see this or it's very off putting.

when i say small, i mean less than 10euro.

Clareman

Amadan90 wrote: »

that's all im doing, floating an idea.
you do address plenty of good points. now my question is, what if they put their own house in my name? would that solve problems or make more problems?

There'd be an awful lot of tax implications, and not meaning to sound morbid but you'd be shooting yourself in the foot for when they die.

Clareman

Amadan90 wrote: »

small deposits weekly to betting site (during the football season)
I've read before they don't like to see this or it's very off putting.

when i say small, i mean less than 10euro.

It's not favourable, open a cash account and deposit the money in a bookies shop rather than online, they'll disappear soon enough

Amadan90

Clareman wrote: »

A friend of mine got a mortgage on a 3 bedroom house by saying that he was going to rent out 2 of the rooms, he didn't have any intention of doing so but the advisor told him to write down that he was going to do so because otherwise he wouldn't get the loan, sh1t like that is coming back big time.

This is very interesting.

Amadan90

Clareman wrote: »

There'd be an awful lot of tax implications, and not meaning to sound morbid but you'd be shooting yourself in the foot for when they die.

morbid is fine.
i was thinking the transfer wouldn't be simple.
I guess it's back to the drawing board.

Clareman

Amadan90 wrote: »

This is very interesting.

Banks knew that another bank would give them a loan so they were willing to do anything.

I guess the only advise I could give you now Op is not to be in a rush and don't think you have to get on the property ladder, if you think house prices are going up and if you don't get something soon you'll never have a place take a step back and look at historical prices and realize that prices will likely plateau or drop, also remember now that a lovely 100k apartment might be perfect for a 29 year old you but 39 year old you mightn't be too happy to be stuck with it. Start saving as much as you can now, there'll still be places for sale in a couple of years.

jlm29

Amadan90 wrote: »

that's all im doing, floating an idea.
you do address plenty of good points. now my question is, what if they put their own house in my name? would that solve problems or make more problems?

I’m assuming you would then be intending to remortgage the house then to buy another property outright.
If the bank went through your finances, would you be able to show a capacity to make repayments? (I.e. have you been saving the same amount each month as the repayments would be?). Would you be looking for more than 3.5 times your income? And could you prove affordability? And how is your credit rating?
What age are your parents? Do you have siblings who might have an issue with that plan?

Clareman

Amadan90 wrote: »

morbid is fine.
i was thinking the transfer wouldn't be simple.
I guess it's back to the drawing board.

Ultimately you want to have your own place but you'll struggle to get a mortgage on your own for it so you've to figure out a way to "beat the system" by leveraging off your parents assets, there's plenty of ways to do it but I can't think of any without a lot of risk (both emotional and financial)

jlm29

Clareman wrote: »

There'd be an awful lot of tax implications, and not meaning to sound morbid but you'd be shooting yourself in the foot for when they die.

That’s not actually true. They can gift a certain amount tax free. But that doesn’t mean it’s the right thing to do.

Amadan90

jlm29 wrote: »

I’m assuming you would then be intending to remortgage the house then to buy another property outright.
If the bank went through your finances, would you be able to show a capacity to make repayments? (I.e. have you been saving the same amount each month as the repayments would be?). Would you be looking for more than 3.5 times your income? And could you prove affordability? And how is your credit rating?
What age are your parents? Do you have siblings who might have an issue with that plan?

yeah it would be to buy another property outright. would a good loan to value ratio help?

Amadan90

Clareman wrote: »

Ultimately you want to have your own place but you'll struggle to get a mortgage on your own for it so you've to figure out a way to "beat the system" by leveraging off your parents assets, there's plenty of ways to do it but I can't think of any without a lot of risk (both emotional and financial)

what if i had assets of my own that was worth €100k. how much would that help to get a mortgage? by using it as collateral.

tomister

One aspect that hasn't been pointed out if you were to go and get the deposit for your own mortgage is to be able to show the ability to repay. Most banks want to see at least 6 months of savings history regardless of having the deposit up front and the savings + rent should be in line with the mortgage repayment amount.
Also having a loan to pay back will reduce the amount you're able to borrow so take that into consideration.
I think you'll have less pain if you try to save up for some of the deposit over 6 months and perhaps you can get a "gift" for the remainder?

Amadan90

Amadan90 wrote: »

The idea is i would pay the mortgage, I would presume the mortgage repayments would be about the same as i would pay in rent but with the added benefit of it being used on something i will own.

If for some reason you cannot pay, it’s your parents who will be in default. Your parents worked their life to pay off their mortgage, don’t put them in a position where they feel they have to remortgage their home and worry about you paying it.

At 29 you are old enough to stand by yourself without your parents help. If you aren’t able to get a mortgage for the home you want, wait, don’t ask your parents to take on your risk. They worked hard enough for long enough to not have to worry about paying again for the home they live in.

Twenty Grand

jlm29 wrote: »

That’s not actually true. They can gift a certain amount tax free. But that doesn’t mean it’s the right thing to do.

320k tax free from a parent.

My own opinion is that if you cant save 10-15k off your own back then you can't afford a mortgage and run a home.
Homes can easily cost you 5k a year if something goes wrong or you need to call a tradesman. Add in your bills and mortgage, etc.

I don't know what position your parents are in, but they could get easily f*cked over by remortgaging the house, or doing those dodgy home equity schemes.

Ursus Horribilis

Did you just wake up one day recently and think you wanted to buy a house? If nothing else, those online bets suggest this is a newish idea of yours. Most people who are of a mind to apply for a mortgage take steps beforehand to ensure their bank statements won't have issues that'll trip them up. No online gambling, no regular dipping into their savings account etc. They also like to see regular sums of money being saved. Maybe you'd be better off getting your house in order, so to speak, rather than trying to "think outside the box". Because of what happened in the 2000s, a lot of these loopholes have been closed. Or at least I hope they have.

If you've not got a lot of money saved at 29 years of age, it suggests to me that either you're not paid that well or you're not disciplined at putting money aside every month. Both will light up like a Christmas tree if you apply for a mortgage. Regardless of whether you pull your parents into this or not. I think you'd be better off just knuckling down and saving the money. And if you're not in a job that's enough to get you a mortgage, look into upskilling.

I bought by myself and often say that the mortgage is only one part of my monthly outgoings. People sometimes forget that all the other bills really eat into their disposable income too. ESB, heating, house insurance, property tax, life assurance, management fees (if you live in an apartment), broadband, bins and general maintenance all conspire to snip away at your pocket too. Then there's furnishing your home, replacing appliances, redecoration etc. Home ownership is an expensive business and there always seems to be something new to take your money.

El Tarangu

I'm not sure this thread is for real...

OP, where in Ireland could you be that (i) houses/apartments are on sale for €100k, yet (ii) rent is so expensive that you can't save €10-15k for a deposit?

Amadan90

El Tarangu wrote: »

I'm not sure this thread is for real...

OP, where in Ireland could you be that (i) houses/apartments are on sale for €100k, yet (ii) rent is so expensive that you can't save €10-15k for a deposit?

Donegal

Amadan90

Ursus Horribilis wrote: »

Did you just wake up one day recently and think you wanted to buy a house? If nothing else, those online bets suggest this is a newish idea of yours. Most people who are of a mind to apply for a mortgage take steps beforehand to ensure their bank statements won't have issues that'll trip them up. No online gambling, no regular dipping into their savings account etc. They also like to see regular sums of money being saved. Maybe you'd be better off getting your house in order, so to speak, rather than trying to "think outside the box". Because of what happened in the 2000s, a lot of these loopholes have been closed. Or at least I hope they have.

If you've not got a lot of money saved at 29 years of age, it suggests to me that either you're not paid that well or you're not disciplined at putting money aside every month. Both will light up like a Christmas tree if you apply for a mortgage. Regardless of whether you pull your parents into this or not. I think you'd be better off just knuckling down and saving the money. And if you're not in a job that's enough to get you a mortgage, look into upskilling.

I bought by myself and often say that the mortgage is only one part of my monthly outgoings. People sometimes forget that all the other bills really eat into their disposable income too. ESB, heating, house insurance, property tax, life assurance, management fees (if you live in an apartment), broadband, bins and general maintenance all conspire to snip away at your pocket too. Then there's furnishing your home, replacing appliances, redecoration etc. Home ownership is an expensive business and there always seems to be something new to take your money.

You're right, you know this thread has actually opened my eyes. I'm a million miles from buying my own house/apartment. Thanks for the advice/reaity check. (This isn't said tongue in cheek, I'm being genuine)

Twenty Grand

Amadan90 wrote: »

You're right, you know this thread has actually opened my eyes. I'm a million miles from buying my own house/apartment. Thanks for the advice/reaity check. (This isn't said tongue in cheek, I'm being genuine)

I'm in the same boat as yourself. Near 30, renting, want to buy by myself. There's a reason most people buy when they get settled and it's mainly money.
Just save save save. And keep saving.

You might want to move in a year for different work. You might meet someone and want to get settled.
Don't buy just because of the "renting is dead money" argument.
Buy when you really need to and can afford to.