using parents house to get funds to buy own house

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?

Dav010

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.

Amadan90

Twenty Grand wrote: »

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.

Yeah, I'll rethink things.
I hope things go smoothly for you and you've got your own place sooner than later. Best of luck.

El Tarangu

Amadan90 wrote: »

Donegal

Fair enough - are you renting a place of your own at the moment? If you were willing to move back into a houseshare for two years, you'd be well on your way to having your deposit saved. Best of luck with it, anyhow.

Ursus Horribilis

If you've not done so, set up a direct debit to move money from your current account into a separate savings one. Then try not to dip into it. If you've any credit card debt or overdrafts, set about clearing those.

Most mortgage providers will only want 6 months worth of bank and credit card statements. That'll give you time to have those online gambling transactions roll off. I was asked for 12 months of savings account statements but I think that was just a standard thing for that provider.

Another thing to be aware of is that when you engage a solicitor, you'll be handing over a few thousand euros to them.

Dolbhad

As other posters have mentioned your parents re mortgaging would mean they need to pay that off by the time they are 65 (some banks lend to 68) so it’s not really an option as mortgage payments are really high. They could transfer the house to you but honestly no solicitor will get involved and sign off on an older couple signing over potentially their only asset to a child unless, at a minimum, a life interest to live in the property is put on the property. Then makes it useless for the bank as they won’t be able to do anything with it.

It would also mean they have no asset to leverage for fair deals scheme when they need it. So even if you got over the hurdle of the bank, any decent solicitor will advise your parents against doing so. Also you don’t say if you use siblings but if you do, I could imagine an issue with that also.

Possibly your parents could sell the house and down sized and give you a lump sum to help you purchase a house but that’s a huge burden to place on them.

It’s tough at the moment as all the ways around it during the boom that allowed young people get on the market alone are gone. But their gone for a reason and it’s because people were left with huge debt they couldn’t cover once there was any change in circumstances. So the intentions of your parents are lovely to try help you out but in reality, to protect both of you it’s not going to work.

Ideally you would live at home, I’d that’s possible and save all your money and see what mortgage you could get in a year or two. Maybe talk to a mortgage advisor and solicitor then and see if there is anything can be done.

It’s really tough trying to buy by yourself at the moment unless your on a high income/not needing to live in the major cities. Hope it works out for you.

bingbong500

Twenty Grand wrote: »

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.

This makes no sense. Rent costs more than a mortgage at the moment. You're saying if you can't pay rent of , say, 1200 a month plus save 1000 a month, you can't afford 900 a month. It's a ludicrous point to make.

jlm29

Dolbhad wrote: »

It would also mean they have no asset to leverage for fair deals scheme when they need it. So even if you got over the hurdle of the bank, any decent solicitor will advise your parents against doing so.

This is OT, and sorry for that OP, but this isn’t true. The reality is that his parents would be better off having no assets when they come to fair deal age/circumstance- fair deal is only fair for the people with nothing. If someone has assets, those assets will be depleted by the state. If someone has nothing, they get the same care, with no penalties. Assets need to be gone out of someone’s name for either 5 or 7 (my brain is a bit broken, I can’t remember which) years before fair deal is applied for.

Dolbhad

jlm29 wrote: »

This is OT, and sorry for that OP, but this isn’t true. The reality is that his parents would be better off having no assets when they come to fair deal age/circumstance- fair deal is only fair for the people with nothing. If someone has assets, those assets will be depleted by the state. If someone has nothing, they get the same care, with no penalties. Assets need to be gone out of someone’s name for either 5 or 7 (my brain is a bit broken, I can’t remember which) years before fair deal is applied for.

I deal with a lot of fair deals scheme for work. At this moment maybe your better off having no assets but in next 10 - 20 years and probably by the time her parents will need to access the fair deals scheme, they will be a lot worse off without any assets. It’s well known pensions and fair deal schemes are ticking time bombs. And for future generations you’ll want as much as you can to be able to take care yourself in old age. The government won’t be doing it for nothing.

Lumen

There are all kinds of scenarios where this can go horribly wrong.

For example, you die in an accident, the house has zero equity, they get sick and can't pay their new mortgage, you can't help them cos you're dead, their house gets reposessed.

Then they're childless (well, minus you) and homeless.

Twenty Grand

bingbong500 wrote: »

This makes no sense. Rent costs more than a mortgage at the moment. You're saying if you can't pay rent of , say, 1200 a month plus save 1000 a month, you can't afford 900 a month. It's a ludicrous point to make.

Is the OP paying 1200 in rent in Donegal?

bingbong500

Lumen wrote: »

There are all kinds of scenarios where this can go horribly wrong.

For example, you die in an accident, the house has zero equity, they get sick and can't pay their new mortgage, you can't help them cos you're dead, their house gets reposessed.

Then they're childless (well, minus you) and homeless.

If their only child is killed and they then instantly become too sick to work (And have no income/mortgage protection policy) I doubt they will care much about the house, and anyway, it takes years and years of not paying a mortgage to be evicted, AND they would still have 150k equity in the house anyway so absolutely no reason for homelessness at any point.

Can we maybe not catastrophise so much?