Parents debt

dmwg40

Hello

Not sure if this is the right area to post.

My parents currently have a Mortgage with a few years left to go. dads 62 mums 60 early next year.

they currently have a few credit card debts and other store card debts etc.
which are starting to worry them, but they are happy living where they are and dont want to move.
would they be able to get a loan as this late stage in their life, but niether are working and there pensions are not huge.
the only idea I could come up with myself was, I buy the house off them for a fixed amount, ie house is 180k i buy it for 90k. I dont own a home at the moment either. pay off both theirs and my card debts and loans,about 40k they end up with cash in there pockets and we clear our debts.they still get to live in the house.
any advise is welcome on this issue.
cheers

Premier_2

Bad idea!

It's not usually a good idea to replace unsecured debt with secured debt.

If you want to reduce interest payments, seek independant financial advice on the best way to re-finance the existing debts using an unsecured personal loan.

But be aware that this is not always a good solution especially if you still keep the credit & store cards as the temptation will still be there to spend, so leaving you with bigger debts with both a loan and cards.

mlz1413

How much of the £40k is you parents debt and how much yours?

How old are the parents debts? ie have the recently got into debt as they are not working?

Could your parents get 0% credit cards and transfer the debts so they can pay off the debt rather than interest? Also when the mortgage ends will they be able to pay off the debts?

You say you currently don't own a house so could buy your parents but what happens if your parents live for another 30 years and you wish to move away from home during that time?

How much rent are you currently paying? If your already in debt could you afford the £90k mortgage, probably over £600pm. If you can afford that much p.m. could you pay off your parents debts for them?

I think you really need to sit down and work out what you can indiviually afford and work out how to live within your means and pay back what you owe rather than going for a tempting lump sum payment that will leave you with bad habits likely to cause more debts in the future. Sorry if that is an assumption but if you could give more details it would be helpful.

dmwg40

Hi

its about 20k each in cards and loans etc.

No when there mortagae end this will not free up enough money to pay off debts too small just over £100 a month,
The debts I would say are the last 3 years or so. Mum got hit with a big tax bill when she stopped working. had issue with her accountant getting ill in her last year of work, being told she was up to date with everything and then year later getting the tax man on her case.

Who would be willing to give them a loan this late in life?
how would they be expected to pay it back if there not working?
or even new credit cards with 0% if there not working ?

I dont think future debt will be a issue. the offending cards will be canceled
Thanks for you posts.

mlz1413

I'd post this question on the DFW board, they maybe able to help with paying back the debts.

Do you have siblings you could discuss your parents debts with? £20k is a lot to pay back and I agree I doubt they would get an extra loan when not working.

I would for the moment keep your debts seperate, you are working age and have a lot more options open to you. Buying into your parents house now will limit your future options hugely. As in your not going to be able afford your own place and will have to live with your parents forever for the sake of a quick fix now.

CLAPTON

When you say you will buy it for 90k I assume you mean that you will get a mortgage for 90K?

Who will pay the mortgage?

It will be say 600-700 per month for 25 years.

It appears you are already struggling as you have 20k worth of debts?

Are your parents willing to sell the house to you for 90k?

Do you have a wife or partner.

Once the house is yours, if you die, divorce etc then it will be part of your estate and your parents may have no rights to live there.

If your parents want to move in later life and you sell your house you will be liable for capital gains tax as its not your principal residence.

Oldernotwiser

My parents were able to get an interest only mortgage at that age so may well still be possible. I'd try this first.

I may have missed something but are you saying that you'd buy your parents house for £90,000 and pay off their £20,000 debts? This looks to me as if your parents will be giving you £70,000 which is generous verging on crazy!

What about moving to somewhere cheaper? This could be the best option of all.

Mozette

dmwg40 wrote: »

Hi

Mum got hit with a big tax bill when she stopped working. had issue with her accountant getting ill in her last year of work, being told she was up to date with everything and then year later getting the tax man on her case.

I would query this with HMRC, unusual to be underpaid when ceasing work. It may be correct, but I'd want to check.

PasturesNew

At your parents' age, it might be worthwhile them looking at selling up and downsizing to a suitable retirement property where they can live for the next 25-30 years. Clear their debts, get the new place right up to scratch and enjoy the rest of their years in a nice smaller, easily manageable place that's just the way they want - and no debts.