Advice wanted helping elderly parents to buy a house.

teachergirl

Hi there, Not sure if I am posting this in the right place but I want some advice. My parents are in their eighties and owned a house 80 miles away from me and over a hundred from my sister. Recognising they were getting frail they made the brave decision to sell up to live in the same small town as me.(I have children and my sister doesn't.) We have a large five bedroom house and next week they are moving in having sold their property. Now I don't mind how long they stay but they are independent and want their own house. I have been looking for them but at the moment there is nothing really suitable. They are going to give up driving so need to be on the bus route and preferably near to us. Now I live in a really quiet street but also quite expensive.They could not afford to live here and also to be honest houses don't often come up. But there is one up for sale for £339,995. Having been droppped quite recently from £350000. When I was in the estate agents I jokingly said if the price comes down on that one let me know.She said how much , I said oh £300000 and she said well they might be interested.
Now my parents can only afford £180000 but what if we could borrow £120000 against our house to buy it with them??? The location is perfect we could be there to support them in a minute if need be and it is by the buses. If they became so frail they needed care ,then a carer could live in. The down side is we would have to have it on interest only for ten years. We could afford this. However, our current mortgage is due to finish in four years at the time our eldest son will be hopefully off to university. We were anticipating having extra cash to help him out and my daughter 3 years later not to mention looking forward to retirement with no other big financial ties.
The key for us is to weigh up the investment potential and practical advantages of this purchase versus the financial commitments and ties at our time of life + any legal complications we haven't thought of.
My sister is quite happy to have the will rewritten to reflect our investment in the house. Now, I know ten years is a long time and no-one has a crystal ball, but what do other people think???
Sorry for the long post.

theartfullodger

Wills can be changed at any time. Familys fall-out: People meet new partners.

Cheers!

Lodger

Catblue

Difficult one.

Are there really no cheaper houses around than the £339K one? You say that potentially a carer could live in, so obviously this house has at least one spare bedroom. Can you look at smaller, easy to maintain houses? Have you thought about a flat, maybe a ground floor one?

Have you thought about looking just a bit further out than your own town? As long as it has good transport links, it shouldn't really matter that it isn't exactly in your town.

Would your parents be interested in sheltered housing? Could you look around at a few places? My former neighbour is in her eighties and just moved into sheltered housing - she says she should have done it 20 years ago. It might be a good idea for your parents since these places are often very sociable and it could provide them with all sorts of new friends and interests.

You are very kind to think of helping them to purchase a house, but it does carry some risks - both for you and for them. £120K is a lot of debt to carry when you anticipate that you will have two children to finance at university relatively soon. What if you and your partner lose your jobs or become ill and cannot continue to pay for two houses? What if only one of your parents would like to go into a rather expensive nursing home leaving the other one at home? How could this be financed if their only asset has a large debt attached to it?

So, personally I would try to keep things simple and would be looking for a house totally within their budget (or a rented sheltered housing place). Your parents might not want to be "beholden" to you in any case.

You seem like a lovely daughter by the way.

teachergirl

Hi there lodger and catblue and thank you for your advice. Let me answer a couple of points. I know families can fall out but I truly believe it will never happen to us..and I know everyone probably says this.
I have known all my life that if I needed something my parents would be there to help..no questions. They have given me money for the first downpayment on my first flat to giving us a large chunk of money when we wanted to buy this our dream house. When my children were little if they became ill with chicken pox or whatever they were there to help out. When my daughter was born and she did not stop crying for nearly 8 weeks they extended their stay indefinitely to help out...I would just like to repay the kindness they have shown me over the years.
There are sheltered housing places in the town and though we have not ruled them out my dad would love to have a garden to potter in and grow tomatoes..these only have communal gardens.As for looking in a different town i feel there is No point in moving 80 miles from us to live in another town.The transport links are not good and it means my children won't be able to "pop" in There are currently only 3-4 houses on the market in their price range, only one of them is near to the bus route but it has a very steep slope down to it which would make it inpractical for the mobility scooters. I think it is highly unlikely(though I do admit not impossible) that we would both loose our jobs as we are both in education and teaching in shortage subjects, in fact if there was a financial crisis I have the abillity to up my hours as I only work part time.
We have discussed options if they get frail and they have both said they would prefer to be in their own home and cared for there, the properties they can afford would be very small. I do hope that if we do buy the place together that they would not feel beholden to us...we are just redistributing our family wealth temporarily.
Thank you for your kind comments Catblue...but they have been wonderful parents and anything I can do for them will probably, in my opinion, never be enough!

PasturesNew

Do you have the room for a granny annexe on your current house?

teachergirl

hi there pasturesnew..the answer is sort of. We had an extension built with this in mind and it is where they will be staying until they find somewhere. It is a very large bedroom with balcony and en-suite. However they still want somewhere of their own with a kitchen etc .(they do like their independence and I respect this) they want a garden to potter in for as long as they can. Obviously if they have the house around the corner they can do this until they cannot manage anymore and then we can help.(my daughter is saving up for a horse(!!!!!) and charges £4 an hour.);)

dopester

teachergirl wrote: »

They could not afford to live here and also to be honest houses don't often come up. But there is one up for sale for £339,995. Having been droppped quite recently from £350000. When I was in the estate agents I jokingly said if the price comes down on that one let me know.She said how much , I said oh £300000 and she said well they might be interested.
Now my parents can only afford £180000 but what if we could borrow £120000 against our house to buy it with them???

I think it is an incredible gamble you'd be taking.. but then I expect house prices have much further to fall. Without joking, I think it is it the sort of gamble where you can both lose your homes. What would happen if your own employment circumstances changed.. and you couldn't keep up payments on all the extra debt you'd taken on?

I personally think you need an education for the problems the public sector has coming to it - especially teaching. Madness if you are relying on current pay-structure.

clutton_2

i think a flat would be the anwer - no steps, ready built in lift/ramps and ground floor flats may have a garden attached. i grow lots of veg/flowers in tubs on tables - love it !!!!

had you thought of them renting ? they could buy an AWFUL lot of rent for £300k .... or ....... could you and your husband buy a second investment house and then rent it to them ?

teachergirl

hi there Clutton,
where we live is a fairly new town. The flats don't have gardens at all. They could afford a house with the £180000 they can put in. I really just posted this because I wasn't sure what implications there would be if we tried to buy the house around the corner. Both mortgages would be against our current property so we would own the one around the corner outright. It is just that there is nothing out there at around £180000 at the moment. We can wait as I really don't mind how long they live with us.
If we got into difficulties we could sell it again and they could come back to live with us and we would just be back at the beggining.

HAMISH_MCTAVISH

This is a great thread, and it's good to see people helping out their family.

I am in a similar situation to yourselves. A few years ago we had an aging relative move in with us due to a change in their circumstances. This happened at the time we had just paid off our mortgage. What we did was buy another property for ourselves to live in and allow the relative to live in our first one rent free.

It's worked out really well for us.

Your current mortgage will be paid off in 4 years, so at that time you'd be looking at carrying a 120K mortgage on your house (which presumably is worth 300K plus) for a decade or so, is that right????

But in addition to that, you'd get the 120K back (presumably plus the interest payments you've made) when your parents house is sold, and then you and the sister would split the remaining proceeds 50/50.

It's a fairly low risk strategy, with a very high probablility of some upside return as well. Prices will certainly be higher a decade from now, no credible commentator or economist suggests otherwise. The majority of pundits are now forecasting the worst is behind us. And there is not a single crash in UK history when prices did not recover from the bottom within a decade.

There is almost no new building going on just now, population is forecast to increase by 12,000,000 over the next 40 years, the housing market is stabilising now, and the recession is ending. Prices over the mid to long term are only going in one direction, and it aint down.

I'd make sure everything is watertight legally, and then just get on with it and help the family out. Great plan really, everyones happy, the family are all close by, and you can all get some upside return on the second house in a decade or so.

Well done you. :T

clutton_2

when they come to live with you, they may find after a couple of months that they love it so much, they might not want to move at all !!!! i bet they just "dont want to be a nuisance" - once they realise they are not a nuisance, they could want to stay ......... softly softly - catghceemonkey


alternatively, why not use the house sale proceeds to extend your own home ? (extensions easier than mortgages) sounds like you might only need a couple of extra small rooms onto the annexe for them and they will be cushtie AND will have a nice garden and grandkids on tap....... how i wish......... !!!