New year, New problem

TroubledYouth

First of all I would like to say Hi, good morning and a Happy New Year to everyone!!!!!!!! :j




Background info:

I am 23, single, finished university 1.5years ago and I currently earn £22.5k with 2 jobs and have been saving £1000 a month so I can get a deposit together for a house and move out.

I live at home with my parents and I am very fortunate I don't pay rent but do help out with bills and food (I know it may seem like I'm spoilt child, I've always thought my parents are well off and they've never asked).

My parents have been made redundant in April and after 3 months of no work they've finally found a job but earning half what they did.







Bad (?) News:

Today my dad has told me he is having trouble paying off his mortgage (not the best of news on new years day!) and would like me to help out, which has made me a little bit depressed and has kept me up all night (not because I have to pay but because of their financial diffculties). He has asked me to contribute £350 a month for rent - I think this is very reasonable and I'll do anything to help them out. If I do not help out then my parents will have to use their savings until my sister completes her nursing course at university. I want them to retire comfortably in the future so would rather they do not dig into it.

Realising I can't save as much as I would like from now on, my plans for a new car will have to change from a hot hatch to a Fiesta TDCI 1.4 55mpg, just so I can minimize my outgoings and keep the monthly savings high.

So just as I've popped outside for some fresh air (-2!!) I thought what if I take over their mortgage payments? They have a house abroad which they are going to retire to within the next few years and also a property which is currently rented out and will give them a very comfortable income. All this is inherited and they cannot sell it.



What are the downsides to me taking over the mortgage and start to pay of the capital? I have almost £20k saved up, the majority of it I can use for the deposit. When they finally retire and come to sell the house they will take back the equity % from when I come in?

1. House is worth about £200K
2. Dad has a £95k interest only mortgage and has no plans for changing it to pay off capital.
3. I have no debts apart from a student loan



What are my other options if this is a bad idea?

I can only think he still owes the £95k when he comes to sell the house, surely no downsides to me taking over it? I have looked at the mortgage calculator figures online and I believe I can pay for it.

Obviously there are bills I will need to pay for - Council tax/phone/water/electricity/TV licence/gas/insurance etc, but lets leave these out for the moment.




Thanks in advance for any advice.

CLAPTON

firstly
when ypou say 'take over' the mortgage do you mean that the house will be put solely in your name and you will get a new mortgage?

or do you mean will will make the actual repayments (how much is that) on behalf of your parents but the 'ownership' of both the house and mortgage remain with your parents?

secondly .. how long before your parents retire and want to sell?

thirdly ... can you do a worked example showing what your take will be when its sold?

forthly... suppose they don't sell for whatever reason?

TroubledYouth

Hi Clapton,

When I say take over, I mean I make the payments from now on. If my parents has a 95K interest only mortgage can I simply take out a £95k mortgage (paying interest and capital) or will it be best to keep everything in their name and just make a monthly bank transfer to their account? House will be in shared name with equal % share?

They will retire in about 3 years time, my sister and I will need to look for a house together when they come to sell the house.

I was thinking more of a shared ownership, when they come to sell I will get the percentage worth of what I've contributed. In the current market the house is worth about £220k. If I take out a £80k mortgage and use £15k of my savings this is roughly 43% of what the house is worth. When they come to sell it I will get back 43% of what the house sells for, and with the bills I will pro-rata it where I can. Obviously I will not be able to contribute much to the bills, I will need to discuss with my dad.

They will eventually sell, they've been asking me to buy a property and rent it out whilst living at home and with the house prices so high it's taking me a while to save up a reasonable size deposit. Very unlikely but if they do not sell I can ask my brother (just finished uni and STILL looking for a job) and my sister to contribute by paying rent.


I haven't discussed this with my dad yet as I don't know if this is a good route and if I've missed anything out?

Trollfever

Families and money/debt can be a minefield'

Today my dad has told me he is having trouble paying off his mortgage

Try the conventional routes:

http://mortgagehelp.direct.gov.uk/default.aspx


.

dimbo61

Well young man if you can afford to save £1000 a month then you should be paying your parents £350 a month for your room.
You eat the food and enjoy the use of gas elec water council tax TV SKY etc
Mum and DAD are now earning much less and still have a daughter at UNI
Time to help out
In 3 years if MUM and DAD do retire to a place in the sun they may well want to rent out the house to you and your sister or sell it ( thats for them to decide)
You carry on building up your deposit and stand on your own 2 feet.
Dont try and confuse matters by taking over the mortgage ( its there property not yours)

Kavanne

I think it's easier to just pay them the rent they want each month tbh.

I THINK (not 100% on it) that all parties on the deeds need to be on the mortgage too so your parents may have to remortgage to put you on as well and that may not be possible if they are on reduced salaries.

I own part of my mum's house but there's no mortgage (I paid it off for her and she put the % of what I put in in my name) but I don't think we could have done it if she'd still had the mortgage....

Just look at it this way... you still get to save £650 pm for the next 3 years.. that means you can increase your deposit by £23400 which means you'll have yourself a tidy deposit of 43400 by the time you come to buy

It'll also be an !!!! when your parents sell if you own it too as it means faffing to get all 3 of you to sign all the papers with witnesses