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Taking over parents mortgage?
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# 1
stoptheclocks
Old 19-02-2008, 11:20 AM
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Default Taking over parents mortgage?

My parents have a mortgage and are struggling with the repayments. They're paying 7.2 interest. I think they can get a better deal but they don't because they're in there sixties and there is 20 years plus on the mortgage. Is it possible to transfer the mortgage to one of the children? The mortgage is approximately 1/4 of the value of the house. If this is possible what needs to be done. I take it, that its not as simple as changing the name on the deed and taking over the payments.

Any information welcome.
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# 2
sarah1975uk
Old 19-02-2008, 11:24 AM
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I suppose you could add your name to the mortgage pay it for a while then remortgage it in your own name. Or you could purcahse the house from your parents and as its between family you wont incurr the agents fees that you normally would do. But obviously you would have to pay legal fees etc.

Someone who knows more will be along soon to advise you i am sure
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# 3
Trying to be good
Old 19-02-2008, 11:49 AM
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In order to help people will need tmore information - the size of the mortgage, the size of the income of the person proposing to take on the mortgage, and credit history difficulties etc.

If the parents were to transfer the title of the property to someone not living there then Capital Gains Tax implications would set in, as well as Inheritance Tax/Potenitally Exempt Transaction stuff.

Tell us a little more, and someone will be able to help (even if it's to tell you it's a no-go).
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# 4
stoptheclocks
Old 19-02-2008, 12:09 PM
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The mortgage is 47,000 and the house is valued at around 200,000. The house is not insured. My parents are in there sixties and have a low income (Pension) The interest rate is 7.2%. The mortgage is for at least another 20 years. I want to reduce the mortgage payments for them. With the value to loan ratio, i think the interest rate is a joke but my dad thinks this isn't possible because of there low income, plus no one would insure the house. There is 4 children (2 have mortgages, one lives in the house but on a low income and the 4th rents a room in another city and returns home most weekends. Could possibly claim to live there. He earns 26,000 a year, has no debt (apart from student loan) and could pay 10,000 off the mortgage.


The key is reducing the interest rate and insuring the house.

If you need any other information let me know.
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# 5
robbiet27
Old 19-02-2008, 7:17 PM
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Just seen ur post.

If your parents are pensioners and on a low income they should qualify for pension credit. If they do pension credit may assist in the payments of the interest on the mortgage - not the full 7.2% but most of it. This would certainly help them, though they will remain responsible for the repayment part of the mortgage.

Contact Pension Credit through the pension service for further advice. They even have a good website with a calculator which gives fairly good indications. Check the link below:

http://www.thepensionservice.gov.uk/...lator/home.asp

I work for DWP as a decision maker though not in this area but the procedures and decision makers guides are broadly the same for all benefits.

Keep me posted.

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# 6
poppy10
Old 20-02-2008, 6:50 PM
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Why would noone insure the house?
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# 7
stoptheclocks
Old 21-02-2008, 10:41 AM
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Because of the low incomes and age, I think. I find this hard to believe myself. I think my parents are taking some bad advice or they're mis-informed. Thats why I posted on here, to see what people thought and hopefully get some good advice.
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# 8
poppy10
Old 21-02-2008, 7:12 PM
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Low incomes and age might be a reason not to offer a mortgage, but shouldn't affect whether they can get home insurance. Something smells fishy here.
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# 9
waddy80
Old 21-02-2008, 7:16 PM
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What type of construction is the house? Had any problems with subsidence floods etc? Really weird that it can't be insured. If you can mortgage it you can insure it.
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# 10
EdInvestor
Old 21-02-2008, 7:27 PM
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Wouldn't it be more sensible if they downsized to a cheaper home for cash and paid off the mortgage?

Another alternative would be equity release, to convert the mortgage into a lifetime one that wasn't repaid until they died or went into care.
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# 11
robbiet27
Old 21-02-2008, 8:31 PM
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Regarding the insurance - it is normally a requirement from the mortgage company for the property (building/s) to be insured to at least the market value of the house - otherwise your mortgage could be deemed not valid.

It seems strange no insurer would provide quote/s for buildings insurance irrespective of your parents age - it is on the property. Though it could be expensive to insure if your property is in an area susceptible to flooding / subsistence etc or if the occupants have made claim/s on their insurance in the past.

This needs to be sorted ASAP.
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# 12
UK007BullDog
Old 21-02-2008, 8:54 PM
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The house needs to be insured ASAP.

Your parents and the child in question need to go to a broker and get this sorted ASAP. Best is to also get a credit report for every one who will be involved in this new mortgage.

Equity release mortgage might also be an idea.

What kind of property is it?
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# 13
stoptheclocks
Old 25-02-2008, 2:18 PM
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The house is a former council house. 3 bedrooms, in a central area. The area doesnt have any flood risks. There has already been an equity release on the property but there is more equity available. I don't want them to release more equity or to sell the the house. It's in a prefect location for them. I would like to get the house insured and get a better interest rate.

Last edited by stoptheclocks; 25-02-2008 at 2:21 PM.
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# 14
Trying to be good
Old 25-02-2008, 4:24 PM
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Stoptheclocks

The current lender wouldn't allow the mortgage unless there was buildings insurance for the property. Do you mean there isn't buildings insurance, or is it contents insurance for the house or perhaps life insurance your parents don't have?

You need to give details of the equity release if people are going to help you - give ALL the facts about the property, existing loans, income and credit history of anyone wanting to take on the mortgage.
Mortgage Free in Three T3; target reduction 162,000 by 12 Dec 15
24,500 of a 45,000 target Mortgage reduction
28,500 of a 60,000 target Cash ISAs
62,000 of a 57,000 target Offset Savings
115,000 of a 162,000 target Net reduction
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