Parents buying me a house......

bosseyed

I'm sure this has probably been mentioned, but if you can theoretically afford to be paying your parents rent at around £700 a month (and presumably all your living expenses), then surely you can pretty much afford to to pay for your own mortgage? Why involve the parents at all?

It just seems a bit of a stretch for your parents to give it all up when you could probably cover yourself financially anyway. And just because its their idea doesn't mean you have to go for it.

geordie_ben

mlz1413 wrote: »

geordie_ben wrote: »

.I currently live with my parents and pay between £500-800 a month to clear this debt. And yes, I do mean between £500-800 a month
.QUOTE]

Geordie-ben £500-800 obviously seems like a lot of money to you and on that note alone I would urge you to live in a full price place for a year before your parents consider lending you any money.

My Direct Debits are over £800 pm and then you need, food, petrol, repair costs, personal spending etc as well. Maybe throwing your money away renting for a year would give you a better idea of home costs so that when you have a full cost mortgage you will know you can cope.

MLZ, £500-800 is alot for me but I work full time, plus part time to allow me to pay off my debt as quick as possible

I still have money to spend every week (yes very small amount) and I still manage to pay all my bills and am never late on any

When I do come to move out I will not be doing so alone so the repayment amounts will be shared be two, possibly 3 people depending on the situation at the time

Although renting for a year might open my eyes to what it is like living away from home it would also throw away the chance of paying back/saving up between £6000-9600

Catblue

geordie_ben wrote: »

NO!! They have lived in this area all their lives, so want to possibly rent in different areas to get a feel for a place before buying.

I am not forcing my parents to do anything, and even if I tried, my mam would give me a clip around the lug!

But how can they afford to buy when you have all their money?

If you can truly afford to pay your parent's rent while simultaneously paying them back for the money that they lent you, then you can afford a decent mortgage on your own.

Your parents also need to take into the account that you have already got yourself into debt once (and you are presumably paying little or no rent to them). Maybe this means (and don't jump on me here) that you are not great with managing money. It just isn't a good risk for them.

What would you say if your sister came to you and said "Mum and dad are giving me the proceeds of their house sale and going into rented. Sorry but they don't have any more money left to give to you. But you'll be fine, don't worry".

geordie_ben

Catblue wrote: »

Your parents also need to take into the account that you have already got yourself into debt once (and you are presumably paying little or no rent to them). Maybe this means (and don't jump on me here) that you are not great with managing money. It just isn't a good risk for them.

my parents are very aware that I have gotten myself in debt, and are also very aware that over the past 7 months I have paid back a very large amount, and will be debt free in another 7 months

I used to be terrible with money, but I am now the tightest person I know when it comes to money and I feel I am now very capable of dealing with having a mortgage. I have also helped my parents with their money situations and now make sure they get the most out of their money, whethers its checking its in the best savings account possible, or using mysupermarket to make sure they're paying the least possible for things

If it came down to that route I would be paying their rent, which would in turn pay back the money they are owed, i would not be paying the money back PLUS their rent

I'm not saying my sister shouldn't get any money. I'm saying that my sister is not in a situation to pay back the money as quickly as I could

I'd love for my sister to both get equal amounts of money, and pay it back at the same rate.

geordie_ben

bosseyed wrote: »

I'm sure this has probably been mentioned, but if you can theoretically afford to be paying your parents rent at around £700 a month (and presumably all your living expenses), then surely you can pretty much afford to to pay for your own mortgage? Why involve the parents at all?

It just seems a bit of a stretch for your parents to give it all up when you could probably cover yourself financially anyway. And just because its their idea doesn't mean you have to go for it.

My parents would we getting involved so that we didnt have to pay back as much in interest as if we went with a proper mortgage

geordie_ben

Doozergirl wrote: »

Insurance doesn't have to be linked to any kind of borrowing at all. If you want to cover that amount then you would insure yourself for a similar amount. Our 'mortgage' insurance is completely unlrelated to any mortgage we've ever had, the policies are underwritten by completely unrelated companies.

Thanks Dozzergirl

getmore4less

Back to some practical aspects

geordie_ben wrote: »

Me and my parents are looking into them selling our current family home and lending me some/all of the money to buy myself a house

If I borrwed most of the money they would move into rented accom

I would then pay my parents back instead of getting a mortgage

We've only literally just started thinking about it and are unsure of the options available



We've thought some of the options could be

• Lending the money until it was all paid back (£100,000 in 12 years)
• Lending the money for 2 or 3 years, paying off as much as possible, then getting a mortgage when they wanted the money back
• Lending the money to buy myself a house, then when they wanted to buy again, i would take the mortgage out and they would like in the 2nd house
• Lending a smaller amount of money as a deposit and getting a mortgage myself

Has anyone ever done something like this?
What are the pro's and con's
Anyone know the legal side?

I have an older sister and obviously my parents aren't getting any younger so we'd also need to think of what would need to happen when they pass away, or if i passed away before the money was fully paid back

Any help would be great!!

The key thing is that the parents might/will want the money back so it is not a permanent gift.

You need to make sure you can do this at any time.

You cannot be sure you can raise a mortgage or sell in the future.

I would get an offset mortgage for as much as you can. they would still need to gift a deposit that they should not expect back(except privately)

Borrow the money and offset it, this way it stays instantly available to pay them back.

This will probably be the lowest cost option available that keeps access to the funds. If 100% offset no interest just setup costs.

You need to budget as if you had the mortgage an put that money away every month.

Consider income/mortgage protection insurance to cover loss of income.
Income protetion may be the better option, I never had any so have not looked into this in detail.

Now a tricky bit there are tax implications if you pay them extra money for borrowing the money, even if it is an unrelated transaction like paying their rent. You need tax advice if you plan to do this.

Now it may be possible to find a lender that allows other parties to offset thus not giving you acces to the money protecting the 3rd party(parents) money.
This would also simplify the legals since you never actualy borrow the money. Also they can pay the rent from their offset pot and you fill up another from income.

Barclays used to to do this but I think they stopped, you could have one of the parents on the mortgage and then they can have their own account with the offset funds but that has other implications.

I think I remember someone saying there is a lender that still does allow 3rd party offsetting

ONe for the brokers, they should know if any lenders provide this oprion.

morg_monster

You say they may want to buy a house in "a few years", what will you do then? Because obviously you can't pay off £100,000 in "a few years"?
You will need to take out a mortgage to cover it, I assume, and if that is going to be straightforward, why not just get a mortgage now?

i too am struggling to see why you can't just get a mortgage, your parents could help you with deposit if they really want to help you out, to make sure you got a decent interest rate.

It does seem that your parents would be risking their nest egg to help you out, when it isn't really needed? It isn't at all certain that house prices are going to rise, they may not get all their money back.

Also about your sister, I appreciate what you are saying re you paying them back quicker, but she may not see it that way. Surely it would be fairer for your parents to help you both out with some money for a deposit, rather than buying you a house and doing absolutely nothing for her! In particular, even if you are only at the very start of discussing this, if you and your parents have talked about it and you don't mention it to her soon, she will probably feel like you guys are going behind her back. In particular if she is out in the big wide world renting while you are living at home rent free (i realise I am assuming this), then she is probably already feeling pretty hard done by. Is she in debt too? If not, it does rather seem that you are being rewarded somewhat by your parents for messing up your financial situation; ie no rent being paid (again i've assumed) and now getting a house!

geordie_ben

getmore4less wrote: »

Back to some practical aspects



The key thing is that the parents might/will want the money back so it is not a permanent gift.

You need to make sure you can do this at any time.

You cannot be sure you can raise a mortgage or sell in the future.

I would get an offset mortgage for as much as you can. they would still need to gift a deposit that they should not expect back(except privately)

Borrow the money and offset it, this way it stays instantly available to pay them back.

This will probably be the lowest cost option available that keeps access to the funds. If 100% offset no interest just setup costs.

You need to budget as if you had the mortgage an put that money away every month.

Consider income/mortgage protection insurance to cover loss of income.
Income protetion may be the better option, I never had any so have not looked into this in detail.

Now a tricky bit there are tax implications if you pay them extra money for borrowing the money, even if it is an unrelated transaction like paying their rent. You need tax advice if you plan to do this.

Now it may be possible to find a lender that allows other parties to offset thus not giving you acces to the money protecting the 3rd party(parents) money.
This would also simplify the legals since you never actualy borrow the money. Also they can pay the rent from their offset pot and you fill up another from income.

Barclays used to to do this but I think they stopped, you could have one of the parents on the mortgage and then they can have their own account with the offset funds but that has other implications.

I think I remember someone saying there is a lender that still does allow 3rd party offsetting

ONe for the brokers, they should know if any lenders provide this oprion.

GM4L, thanks very much! I know it hard to ignore the moral side of this question but your advice is very much appreciated

I do have to admit you have completely lost me of the 'offset' comments

I wouldn't actually be paying them extra money, by paying extra I mean if we set the repayment figure at £600 and their rent was £500 then I would still be paying the extra £100 into a savings account (hope that makes sense)

Thanks again for your help!

Fire_Fox

Can you actually afford to pay your parents back £500 to £700 a month and pay ALL the bills on your new house? You are already working two jobs and paying back up to £800 a month BUT you are living with your parents so paying all your current bills is only going to be a mobile phone, perhaps a car and a contribution to food and utilities.

What happens if you get made redundant, long term sick, get your girlfriend pregnant with twins .... As far as I am aware benefits don't take into account mortgage repayments for the first few months, nor loans from family at all. Servicing an insurance policy for income protection is usually pretty expensive, and unless it's paid directly to your creditors (e.g. mortgage company) then the government can count it as income .... and reduces your benefits entitlement accordingly.