Buying parents house £100k under value

mmdp4wy2

Thanks Rich, I've just been reading into that actually! My parents don't have many assets at all. If the unfortunate did occur even years from now, I doubt it would exceed the threshold!
On another note, if in the future I were to look another property to buy for myself, or even to buy-to-let, would I be able to use the £100k difference as equity for a deposit? Someone told me, it doesn't work this way, because I have originally only put in a £15k deposit to borrow £85k for a house technically worth £200k??
Cheers guys

mmdp4wy2

Richard_Webster wrote: »

Your house is worth what it is worth - you can't magically add the £100K to its value to enable you to get a mortgage or a more favourable/larger one on your own house.

I think I understand... If I bought the £200k property for £100k, and devleoped the house to a new market value of £250k... I would only see an increase of £25k in my equity?? Because I haven't paid the full price for it...
This is confusing!
:money:

BitterAndTwisted

People have bought second properties using the equity in the property they already own. What matter is whether your earning are high enough to qualify and that you can afford to pay both mortgages.

Have you discussed this plan with your parents at all?

mmdp4wy2

BitterAndTwisted wrote: »

Have a look at the Age UK's website for guidance of DofA.

If you can get a mortgage on the property and continue to live there you will be able to use that £100k of equity as a deposit on another property. Depends on how much you earn and whether you could afford both mortgages.

It sounds like your parents are not in a position to give away £100k to anyone. They could take that equity and buy a property outright. Everything will sell in the current climate. Somewhere sensibly priced will sell quickly.

You know what they say about people who've been bailed out of the mire, don't you? That often they learn absolutely nothing and get themselves back into the mire tout suite.

Thanks... I'm glad I didn't rush into this. There are so many other things we need to consider. What seems like a good option now, may not be so good in a decade...Hmmm

mmdp4wy2

BitterAndTwisted wrote: »

People have bought second properties using the equity in the property they already own. What matter is whether your earning are high enough to qualify and that you can afford to pay both mortgages.

Have you discussed this plan with your parents at all?

Indeed, this has been all we have talked about in the past few months. My earnings are good, but not good enough to support my parents as if they were my own children, and especially since I am considering to start my own family soon too. Money is the root of all evil :eek:

Emmzi

the house is worth £200k

you give folks £100k

They clear £70k or debt and are left with £30k.

So they are paying flat rate 17% interest on their 70k debt. (£1k a month)

I think they would do better getting a remortgage themselves.

When you say "getting old", how old?

How much is their mortgage?

What are their total debts?

I'd certainly expect you to be paying circa £500 a month rent anyway if you are working, so I am not sure the position is as extortionate as it sounds. Chipping in an extra £500 to help with loans.. not so bad. Not great, but not so bad.

dancingfairy

To be honest the best thing may be to have a chat with them. It would seem on the face of it best to me if your parents were left to sort out their debts etc (with support but not by paying them 1000 a month - is this actually paying the debt off? are they racking up more? what are they doing about things? ie have they sold stuff to pay off the debts? worked longer/second jobs?).
You meanwhile would need/want to be there for moral support but would have 1000 a month (not an insignificant amount) to save up for a deposit of your own.
Best of Luck
df

BitterAndTwisted

It's not the money per se, it's the spending of other people's as if it were one's own! As I hope your parents have realised by now.

Emmzi

dancingfairy wrote: »

You meanwhile would need/want to be there for moral support but would have 1000 a month (not an insignificant amount) to save up for a deposit of your own.
Best of Luck
df

Less his rent money to them....

mmdp4wy2

Emmzi wrote: »

the house is worth £200k

you give folks £100k

They clear £70k or debt and are left with £30k.

So they are paying flat rate 17% interest on their 70k debt. (£1k a month)

I think they would do better getting a remortgage themselves.

When you say "getting old", how old?

How much is their mortgage?

What are their total debts?

I'd certainly expect you to be paying circa £500 a month rent anyway if you are working, so I am not sure the position is as extortionate as it sounds. Chipping in an extra £500 to help with loans.. not so bad. Not great, but not so bad.

Haha...not too old! They are both 64...65 soon.
There's no income. My dad has been living off credit cards for the past few years. He didn't tell any of the family. We all thought we were okay. Now, theres an outstanding balance of £30k mortgage. And £40k credit card balance.
I live at home with them, but only because if I move out, I won't be able to pay their bills. If they remortgage, they will still have to use money...ie my money. They have suggested I buy the house, because hopefully I see some reward sooner rather than later.