Taking equity?

Graham_Devon

michaels wrote: »

If you make them an unsecured loan and they later withdraw all the equity from the house (may be your sister has a 'crisis' and they bail her out?!) then there may never be any assets left for you to get your repayment.

It wouldn't be an unsecure loan, I would be buying a percentage of the house, I would then own that part of the house, so they could never withdraw my part of the home, as far as I'm aware.

Anyway, thats a pretty far fetched argument, I see what you are saying, but it just wouldn't happen

Anyway, if my sister was in such a crisis that she needed over 200k to sort herself out, I wouldn't be worrying too much about my share, this isn't so much about the money, but more "keeping it in the family" as it were.

PasturesNew

As I see it, GD buying into the parents' house - so long as the sister is kept in the loop and understands she can do it too, or wait for a lesser payout - is a good idea.

There is money in the house that they can get - and if it goes to a company then:
- you pay their costs
- they are making a profit out of it, money that could be in the parents' pocket
- upon sale there will be papers to dig out, bridges to cross, hurdles to jump

It makes sense all round if GD were to buy a portion of the house - keeps any small print vulturing at bay, gives his parents the best deal.

Only thing is the sister has to understand the deal, that she can come in if she wants, that there will be a reduced sum from the future sale - and that even though she can see at that point that GD "gets more" he's laying out money now and because of this the parents will have more money in their pocket. So just make sure she really understands all the angles and doesn't feel stiffed (because she wouldn't be being stiffed).

Ian_W

Hi Graham,
If you're still reading this in the circumstances this SITE may be of interest. It's an umbrella organisation of companies who do equity release with a no negative equity guarantee.

Equity release has had a very bad press in the past but a couple of years ago was regulated by the FSA and only specifically qualified IFAs can now advise on it. As someone else said, it works better for older people so though you can do it from age 55 upwards it's probably not advisable until much later. Some co's now do drawdown schemes which means that a total sum is agreed but it is paid out as an income and the interest only accrues from each pay-out, which might suit what your parents have in mind. Worth exploring but for most people I think, if not a last resort, then certainly not a first one!!

Your thought of buying a % of your parents home is probably best - if it's enough for what they want now and in the foreseeable future.

Worst option IMO is sale/rent back. They sell in a depressed market at way below the depressed value and have limited security of tenure paying rent for the rest of their lives. Hostages to fortune - then some!!

HTH.

Former_MSE_Andrea

Hi everyone

We've removed a few posts here. Our volunteer board guides do what they do in order to help the MSE Team. If you feel they've posted or done anything they shouldn't then report the post/thread to abuse@ as usual.

Thanks

Andrea

Now back to the topic...

Graham_Devon

So you have spent time deleteing my post asking for the thread to be deleted, after asking politiely for it not to be moved only for it to be moved and not deleted, spent time deleting others posts saying what was the point in moving.

What on earth is the point really?

Can it please be deleted.

tomterm8

I've made a complaint to abuse@ as suggested by Andrea. I've also deleted my post earlier, and would ask anyone who quotes Graham to do the same.