using parents house to get funds to buy own house

Amadan90 · 08-07-2019 5:25pm #1

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 · 08-07-2019 5:26pm

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 · 08-07-2019 5:31pm

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 · 08-07-2019 5:33pm

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 · 08-07-2019 5:37pm

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 · 08-07-2019 5:40pm

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 · 08-07-2019 5:43pm

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?

Dav010 · 08-07-2019 5:44pm

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 · 08-07-2019 5:46pm

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 · 08-07-2019 5:50pm

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 · 08-07-2019 5:50pm

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 · 08-07-2019 5:51pm

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 · 08-07-2019 5:53pm

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 · 08-07-2019 5:55pm

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 · 08-07-2019 5:55pm

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 · 08-07-2019 5:58pm

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 · 08-07-2019 6:01pm

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 · 08-07-2019 6:03pm

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 · 08-07-2019 6:04pm

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 · 08-07-2019 6:04pm

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

Clareman · 08-07-2019 6:08pm

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 · 08-07-2019 6:10pm

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 · 08-07-2019 6:12pm

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 · 08-07-2019 6:13pm

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 · 08-07-2019 6:16pm

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.

08-07-2019 6:17pm

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 · 08-07-2019 6:18pm

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 · 08-07-2019 6:18pm

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 · 08-07-2019 6:20pm

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 · 08-07-2019 6:21pm

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 · 08-07-2019 6:21pm

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?

using parents house to get funds to buy own house

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