RESTRUCTURE PARENTS MORTGAGE

PokeHerKing

Hi All,

Looking for some free advice from anyone that might know. My parents currently have 3 years left on their mortgage. Around 55k @ 3.7% variable rate, house worth 550/600k.

The repayment is roughly 900 a month. They've only been paying half since the start of the pandemic as my dad hasn't been able to work, he's a musician who would have gigged etc.

Would it be possible for me, 36 yo male earning 85k a year to get the mortgage trf into my name and extend the term to say 20 years? To reduce the repayment to a manageable monthly amount that my dad would actually pay?

I have my own mortgage of 140k on a house worth around 450k.

Is the above possible?

Atlantic Dawn

With so little left on the mortgage the bank will not create a new mortgage for this amount as they would have no hold on the property with a mortgage of 10% of the price remaining. You giving them a loan of the remaining amount via a personal loan you take out might be an easier solution.

phormium

The bank won't transfer the existing mortgage into your name, what you would effectively be doing is taking out a new mortgage as though you were buying the house so would have the legal fees etc. Your name then would be on the deeds too, would your parents be happy with this? They would need a right of residence or similar to protect them, bank might not like this either. Any siblings? They might not be too happy about the family home being in your name, or then again they might trust you, I know in our family it wouldn't be an issue but not all are the same!

Back in the boom the bank might have added you onto the mortgage and extended the term with just your parents on the deeds but doubt if any of them would be doing that now.

So you having an actual mortgage on the house is the messiest option imo, a straight forward loan from somewhere would be simpler but then again it would be a lot shorter term and higher interest than the mortgage so would not benefit them as much repayment wise.

If anything a top up mortgage on your own property might be better option and then loan that to them. Mind you to get that you may need to doing 'renovations' to your own house :)

AnRothar

How old are your parents?

PokeHerKing

Cheers folks. I'll look into the personal loan/adding to my own mortgage side of things. If I did go that route, can I just give them the money to pay it off and then they make the loan repayments. Would that incur any dort of tax implications for either of us?

Parents are both 66

Sir Galahad

https://www.boards.ie/discussion/comment/118662982#Comment_118662982

And do you have siblings ? Be careful if you do, make sure your interest (the loan) in their property is noted in their will.

PokeHerKing

https://www.boards.ie/discussion/comment/118663965#Comment_118663965

Just one sister. We're a very tight family so I've no fear of any issues but cheers for the advice. If we do pull trigger ill make sure everything's squared off just because, never say never and all that.

Sir Galahad

https://www.boards.ie/discussion/comment/118663982#Comment_118663982

Just get good independent advice from a solicitor. Well done for looking after your parents.

AnRothar

https://www.boards.ie/discussion/comment/118663948#Comment_118663948

Couple of different things in play here.

Your parents have a lifetime allowance which they can get from you. Above this there are tax implications.

Second item is the "small gift" exemption which is €3000 per annum.

So you could gift €3000 to each of your parent's and only the balance of 55k-6K falls under the lifetime allowance.

But get proper advice.

wildwillow

You could gift them each €3000 per year without a tax implication. That would allow them to pay an extra €500 per month on the mortgage. Your father may be able to get more work now that things have opened up and catch up on payments themselves.

If you decide to add to your own borrowings, make sure it is noted and repaid to you, even if it's far in the future, perhaps as a percentage of the the house value.

It's all very well to say that you are a united family but money matters can cause rows. Spouses may not be as willing to help as children.

Well done for thinking to help your parents. They are not so old that they can't do lots to help themselves. You don't say if you are married, in a relationship or have children, but you are at an age where you may be thinking of a family of your own and all the expense that carries.

3DataModem

https://www.boards.ie/discussion/2058233797/restructure-parents-mortgage

If everyone is sensible, and everyone trusts everyone (including your siblings spouses, for example), then the simplest solution administratively is probably;

Option 1:

You basically lend your parents 55k, by topping up your own mortgage. Your LTV is pretty low, so probably not impossible. That's pretty easy overall.

You'd then be asking your dad to pay you 500 per month until the 55k is "cleared", or just ask them to leave you the extra 55k (plus interest, if you are that way inclined) in their will. You will both require legal advice, and you are taking on some risk here.

Option 2:

You give / lend your parents 28k (half the amount) thus reducing their mortgage payments by half over the remaining term. You ask them nicely to square 30k extra away for you in the will as per above.

Both above options become potentially super complicated if

• they sell
• a sibling moves in with them
• a sibling dies, and their spouse remarries
• they remortgage the house again (!)
• they rewrite the will
• one of them dies, and the other remarries

But if it was me, I'd give them the 28k by topping up my own mortgage. Make sure every sibling is aware (in writing) that this will be provided for in the parents will. This doesn't guarantee anything, but probably mitigates some of the risk.

3DataModem

Just to add, the above schemes work well IMO because

• interest rates on mortgages are very low at the moment, and for the forseeable, so interest not a huge factor
• the amounts (25k/50k) are small, relatively to your net worth
• you have a great LTV