Buying Parents house

secretgarden

I no long need advice on this thank you for your help.

Jowo_2

NeenLong wrote: »

If they sell the house at full price they clear their debts but have no money to buy another property and could only afford the rent on a 1 bedroom flat which they don't want to do.

Yes, people who can't afford a mortgage rent properties. Generally a couple tend to rent a 1 bedroom property. So what's wrong with this, it's how most of the population get by. Don't you think it's a shame your parents are guilt tripping you into subsidising a lifestyle they cannot afford?

NeenLong wrote: »

My boyfriend and I are only there temporally so if we sell to them for the full price they won't be able to afford the mortgage payments once we move out so that's why they want to sell it cheaper.

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Just to confirm - you plan to buy the property from them at a 50% discount and then sell it back to them at this same price?

Is this really feasible considering that they may have a poor credit history so lenders will not give them a mortgage again?

What if they can't buy it back - you are then stuck with a property that affects you which aren't living in, making it hard for you to buy a property to live in yourself?

Is there something you are not telling us - why can't they hang onto the property and pay off their debts at the same time without this rather complex set-up? Have they seen a debt specialist to help them with a proper strategy to deal with their commitments?

How old are your parents?

Cannon_Fodder

If £100k clears all debts, selling for £150k would give them £50k in the bank to either live off in rented or put down as a deposit on a new, smaller place. (subject to age, income etc)

Leaving you free to live where you like/need.

If they are elderly, "giving" you £50k will not sit well with benefits or council re deprivation of assets rules.

Why do they not just re-mortgage to £100k, use the spare to clear the debts - they have the income to pay it when you leave...though I'm not sure a Lender would agree its affordable...that saves you being tied to it, fees and costs in "selling", getting your mortgage etc.

Don't see any Lender wanting to give a mortgage to people who are not going to be there long-term, with incumbent nearly-elderly parents wanting a lifetime interest in the place.

Jowo_2

Once you move out of the property, your parents become your tenants and there are many landlord related laws you must comply with. You keep saying that they are paying the mortgage, but they are not - they are paying you rent, you are paying the mortgage. You then are obliged to pay tax on the rental income profits and are exposed to capital gains tax when its no longer your primary residence. You would need the consent of your lender to rent the property which they can refuse, if this is arranged as a conventional residential mortgage.

The landlordzone website will give you information on your tax liabilities and how CGT works.

How are you going to cope with interest rate rises? They are at a historic low and the only way is upwards. What are your plans when the mortgage you are due to pay the lender shoots up but you can't increase the rent to your parents? how will you cope with the shortfall, plus pay for all repairs to the property which you are obliged to do as a landlord? You seem to want to peg the rent at the cost of the mortgage but this isn't how rents generally work for professional landlords (I know you are a novice one and barely see yourself as their landlord, but legally you will be).

If your dad is getting £900 per month pension and your mother is in employment, why is it that they can't afford their lifestyle? What sort of debts and financial commitments do they have where they think they need their daughter to spend 10k of her own money to ensure they can keep living in the property?

what's the strategy for if, beg my pardon for mentioning it, but one of your parents passes on - how can they afford to pay the rent when their income halves and your mortgage payments actually increase due to interest rate rises, for example? £900 isn't a great sum of money if rent takes away half of it.

PasturesNew

Jowo wrote: »

...

I hadn't thought of that ... also, as they'd be planning on going abroad, they'd need to put it in the hands of a UK agent to act on their behalf as they don't have a UK address... unless there's some handy aunty or whatever that's capable.

And, if they're abroad, don't the tenants have to pay X% direct to HMRC to cover tax potential?