Adult kids buying into equity of our house?

getmore4less

Why is there a mortgage of £70k on a house that cost £25k?

what was the value when first rented?

When was the equity buyout done on "B"

Was A your house before you bought/inherited B, how long

Your £200k rental is grossing around 5.4% after costs it will be much lower.

whats the mortgage rates might be time to review the rental
(remember the amount the place is worth as cash is probably less than £200k)

You said B a fixer upper how is that to be funded when will that work be complete.

getmore4less

Sadie_Su wrote: »

I pulled the 6% interest rate from your calculations, on the basis that it was a useful rule of thumb.....might get a better rate than that initially, but it's likely to trend upwards over the next decade, along with the underlying value of the houses.

Using the children to dig us out? :rotfl: this whole exercise is FOR the children, to give them a chance of inheriting a chunky set of assets when we fall off our perch. Easiest option for us would be to move back to House A, sell House B, pocket £300k and live comfortably for the next 25 years until we sell house A to pay for our nursing home care. Best option is for us to work as a team to preserve, build and develop the assets, rather than cashing them in.

Or give the kids their "inheritance" now an let them grow it in properties they are living in rather than renting or living with you.

I think inheriting part of this house may have skewed your thinking, chances are if you had inherited money there is no whay you would have bought B with a £200k interest only mortgage.

Thrugelmir

Sadie_Su wrote: »

OK, in round figures, House A has a value of £200k, a repayment mortgage of £70k, and a rental income of £900 per month. House B has a value of £500k and an interest only mortgage of £200k. Parents have income of £40k and £20k, children have income of £50k and £25k.

Why not sell house B. Then use the proceeds to:-

a) Repay the mortgage on House A.
b) Gift your children enough for a deposit and purchase costs on a starter home each.
c) Invest the rest to give yourselves a secure income when you retire.

Cornucopia

I can't see that having £430k equity and some good salaries is that much of a problem. It's just a question of how you want to "slice the cake".

If it were me, I would be looking to sell House B, redeeming the problematic mortgage and downsizing to become mortgage-free. You then have various options including gifting the children the equivalent of your old mortgage payments (or accumulating them as a fund for later).

House A looks to be "washing its face" quite nicely, so I'm thinking that it should be left to carry on as-is.

I would also be putting some of the potential scenarios into Excel to have a play with the figures.

As a separate thing, it might also be an idea for the children to look at purchasing rather than renting.

luminox55

Sorry, but I think that sounds like it'll cause a horrendous mess.

grey_gym_sock

do you mind which house you live in? because living in (the more expensive) house B is costing you the rental income you forgo by not letting it. a house is unlikely to be a good investment if you receive no rental income for decades, and meanwhile pay all the upkeep.

if you don't mind which house you live in, you could move to house A, remortgage house B as a BTL, which could (as a BTL) be up to 75% LTV and interest-only, allowing you to pay off the mortgage on house A.

if you prefer to live in house B, then to deal with its interest-only mortgage: if you don't want to remortgage house A (as holly outlined), you could sell house A, using the proceeds to reduce the mortgage on B, which would go some way towards making the remaining mortgage affordable on a repayment basis.