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  • FIRST POST
    • tmm aka tracy
    • By tmm aka tracy 2nd Oct 17, 11:46 AM
    • 112Posts
    • 92Thanks
    tmm aka tracy
    buying my son's house
    • #1
    • 2nd Oct 17, 11:46 AM
    buying my son's house 2nd Oct 17 at 11:46 AM
    Hi, hopefully somebody can provide some help to help me out with a strange option.


    My son bought his house in 2010 with a gift of deposit from me. (no need to repay); Seven years on he now has a baby with another on the way, two dogs and his my beloved DIL.


    They owe around 45k on the mortgage, and pay in the region of 350 a month towards it. They really need to move to a bigger house before the new baby comes along next May, but are a bit stuck in that the house is only worth what it was bought for, so no 'profit' without a bit of spend on the kitchen and bathroom. They don't want to spend what money they have on this house and then be stuck waiting to sell, unable to find a new house to move into.


    I'm almost mortgage free and have equity and savings. Would it be possible for me to 'pay off' their mortgage / buy the house from them to allow them to move?


    I know there is a 3% levy for 2nd house purchase, which i'd like to avoid if possible. Ideally, they can then find a house, move out, we can update the kitchen / bathroom and sell or rent this out. I get my money back, they have a new house big enough to raise a family and we'll all be happy.


    Does anybody have any insight on what would be the easiest way to do this? I have my endowment maturing in March 2018, but would prefer to move before this date.


    Thanks in advance for any advice.
Page 1
    • Pixie5740
    • By Pixie5740 2nd Oct 17, 12:50 PM
    • 11,196 Posts
    • 15,643 Thanks
    Pixie5740
    • #2
    • 2nd Oct 17, 12:50 PM
    • #2
    • 2nd Oct 17, 12:50 PM
    You're unlikely to see the money back that you spend updating the kitchen and bathroom. Yes it will make the property more attractive to buyers but idount you'll make any extra profit especially once you've taken the costs of buying and selling including the higher rate of SDLT into account.

    You're ove- complicating the situation. Just let your son sell the place and buy a new one.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • maninthestreet
    • By maninthestreet 2nd Oct 17, 8:08 PM
    • 15,153 Posts
    • 13,582 Thanks
    maninthestreet
    • #3
    • 2nd Oct 17, 8:08 PM
    • #3
    • 2nd Oct 17, 8:08 PM
    Seven years down the line, and the property has not increased in value - what part of the country is the property located??
    "You were only supposed to blow the bl**dy doors off!!"
    • Thrugelmir
    • By Thrugelmir 2nd Oct 17, 9:35 PM
    • 56,181 Posts
    • 49,562 Thanks
    Thrugelmir
    • #4
    • 2nd Oct 17, 9:35 PM
    • #4
    • 2nd Oct 17, 9:35 PM
    How much is the property worth?
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • amnblog
    • By amnblog 3rd Oct 17, 7:41 AM
    • 10,069 Posts
    • 3,925 Thanks
    amnblog
    • #5
    • 3rd Oct 17, 7:41 AM
    • #5
    • 3rd Oct 17, 7:41 AM
    If it will rent, it might be a good idea for you.

    You won't avoid the 3% extra SDLT if you keep your current home
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • tmm aka tracy
    • By tmm aka tracy 3rd Oct 17, 9:25 AM
    • 112 Posts
    • 92 Thanks
    tmm aka tracy
    • #6
    • 3rd Oct 17, 9:25 AM
    • #6
    • 3rd Oct 17, 9:25 AM
    Thanks everybody.


    Its only a small two up two down, bought for around 68k, lucky if its worth 72 now. but the redemption is around 43k. It's in North Manchester.


    My main driver is that with such low interest rates, me being mortgage free just means my money will be sat growing in an account without earning much. I don't want to move or buy myself just yet.


    Renting this out is an option, once its been spruced up, there is a growing demand in the area. I think an earlier poster said i'm over complicating things, and perhaps that's right. I just don't want to see my offspring struggle when this could be a great opportunity if we worked together on this.


    Thanks again for your responses.


    Tracy
    • AnotherJoe
    • By AnotherJoe 3rd Oct 17, 9:36 AM
    • 7,664 Posts
    • 8,277 Thanks
    AnotherJoe
    • #7
    • 3rd Oct 17, 9:36 AM
    • #7
    • 3rd Oct 17, 9:36 AM
    The cheapest and simplest option would be for him to just sell it a good price, because any other option would incur costs and hassle that would almost certainly outweigh the benefits and the cost of buying and reselling are no dealing with second home SDLT.

    It sounds as if this house would sell to someone without a chain under them so as long as you picked your buyer carefully the chain would be no more complex than it will be anyway since there will likely be a longish chain above him.

    Certainly forget redoing kitchen and bathroom, unless it's absolutely squalid you'd never get your money back.

    Whether you become a landlord is a different matter, I'd say this is a terrible time to be getting into it what with tax changes and the threat of government introducing at best additional restrictions and at worst rent controls. I make no comment whether those are good or bad things, but from an investment POV definitely bad. There are plenty of places you can get the same or better yields as property without any of the hassle and costs
    • tmm aka tracy
    • By tmm aka tracy 3rd Oct 17, 9:42 AM
    • 112 Posts
    • 92 Thanks
    tmm aka tracy
    • #8
    • 3rd Oct 17, 9:42 AM
    • #8
    • 3rd Oct 17, 9:42 AM
    Thanks, I agree, there is such a lot of uncertainty, and as a higher tax payer, it really doesn't stack up for me.


    Back to the drawing board then.....
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