Should I help buy my parent's council house?

Hominu

SephirothX wrote: »

For him it's a £29k mortgage with interest taking it up to around £32k which the bank thinks he can afford without taking into account outside income (my payment).

If the house is valued at 64K, then the bank might be thinking of what he's likely to pay off in 3 years and then what they can sell the house for in 3 years. If they can make a profit (and it seems like they would, house prices are not going to decrease in value any time soon), then if he defaults they most likely will not care.

He should also declare the extra income from you of £1980, for tax calculation purposes, specially if he has a private pension as well. From his bank statements it would be clear that he was receiving it, and HMRC could even request it after his death if tax on it is payable. If you wish to defraud them, pay your dad in cash (and don't let him put it in the bank) each month so as not to leave a paper trail.

BobQ

SephirothX wrote: »

It would be in my dad's name only, or at least that's the current plan.

For me it would pretty much be a £16k debt that I pay via a direct debit to my dad's bank account every month.

For him it's a £29k mortgage with interest taking it up to around £32k which the bank thinks he can afford without taking into account outside income (my payment).

Well on that basis you ought to expect one third of the property in your name. Otherwise its a big gamble for you. You pay a third of the cost and he could change his mind, get need a care home and you get nothing. Worse still he could live till he was 90 and marry his home help:).

I did something similar for my parents but they insisted I had a fair share to protect my interests. Also what about your Mum's interests? Also do you have any siblings?

goodmorningsunshine

Buy it, good choice, you say you may be there for another couple of years at least, so would your parents want this payment along with the board and lodgings you give them every month already - you do give your parents a monthly amount - yes? or would they take this as payment for board and lodgings for you staying there for the time being?

Your bonus could be put away as if you had never received it and when the time comes for you to move out, you have 2-3 years bonus stashed away in which case would pay for the following 2-3 years, which (I hope you are following this) would mean you would only need to find (possibly) the last 2 years of the mortgage, by which time, who knows where you will be and what you are earning.

Recap; pay parents board and lodgings next 2-3 years
meanwhile; Stash away any bonus's received over next 2-3 years

Pay mortgage when you leave parents home out of stashed bonus'
leaving 2-3 years to pay at end of term. Comprendeh ??

SephirothX

Hominu wrote: »

If the house is valued at 64K, then the bank might be thinking of what he's likely to pay off in 3 years and then what they can sell the house for in 3 years. If they can make a profit (and it seems like they would, house prices are not going to decrease in value any time soon), then if he defaults they most likely will not care.

He should also declare the extra income from you of £1980, for tax calculation purposes, specially if he has a private pension as well. From his bank statements it would be clear that he was receiving it, and HMRC could even request it after his death if tax on it is payable. If you wish to defraud them, pay your dad in cash (and don't let him put it in the bank) each month so as not to leave a paper trail.

Holy crap, I never knew it was fraud to receive money from your children if you don't go and pay tax on it. I wonder if that works the other way around, all those 20ps they gave me for the shop when I was a kid.

BobQ wrote: »

Well on that basis you ought to expect one third of the property in your name. Otherwise its a big gamble for you. You pay a third of the cost and he could change his mind, get need a care home and you get nothing. Worse still he could live till he was 90 and marry his home help:).

I did something similar for my parents but they insisted I had a fair share to protect my interests. Also what about your Mum's interests? Also do you have any siblings?

I guess I will have to discuss the care home possibility with them. My mum wouldn't be paying anything towards it as she doesn't work. No siblings.

goodmorningsunshine wrote: »

Buy it, good choice, you say you may be there for another couple of years at least, so would your parents want this payment along with the board and lodgings you give them every month already - you do give your parents a monthly amount - yes? or would they take this as payment for board and lodgings for you staying there for the time being?

Your bonus could be put away as if you had never received it and when the time comes for you to move out, you have 2-3 years bonus stashed away in which case would pay for the following 2-3 years, which (I hope you are following this) would mean you would only need to find (possibly) the last 2 years of the mortgage, by which time, who knows where you will be and what you are earning.

Recap; pay parents board and lodgings next 2-3 years
meanwhile; Stash away any bonus's received over next 2-3 years

Pay mortgage when you leave parents home out of stashed bonus'
leaving 2-3 years to pay at end of term. Comprendeh ??

That idea does sound decent, and it would be in place of any board.

But apparently it's fraud if my dad doesn't pay tax on the money I give him, meaning I'd have to pay £2500 per year, which just isn't worth it?

But yeah any further replies will have to wait until tomorrow. Third time I've said that now but I felt I had to reply to Hominu's fraud comment tonight as it's a big penisblock.

marmitepotato

OP, just a thought here, but what if your parents became ill and their mental status changes. If you are not on the mortgage and they decide to leave their property to the local dogs home. How would you get your money back?

I only asked this as a friend of mind did exactly the same thing as you are considering. The mother died, the father took his grief and anguish out on the daughter who was helping him pay the mortgage. Father changed his will leaving the property to someone else........

BobQ

SephirothX wrote: »

Holy crap, I never knew it was fraud to receive money from your children if you don't go and pay tax on it. I wonder if that works the other way around, all those 20ps they gave me for the shop when I was a kid.

I think this advice is not entirely valid. Certainly if you produced bank satements showing a regular transfer the question would be asked as to what the money is for and if they were claiming benefits the income would need to be declared for that purpose.

But while you are living there there would be little tax liability, especially if your name was on the deeds and used to pay a mortgage. Even it were not your parents would not make a profit by the time the expenses of you living there (food, heating etc) had been deducted. Also you could pay your Mum - it would be well within her personal allowance as a non earner. Obviously if you moved out it would be different.Might be better to ask this question on the tax thread.

I guess I will have to discuss the care home possibility with them. My mum
wouldn't be paying anything towards it as she doesn't work.

You ought to consider all possibilities as should they. Its probably not going to happen (statistically unlikely, especially at their age) but you do need to ask what if? Now if the house were partly in your name that would not be a problem, buit might be a risk to them.

Your Dad's attitude to your Mum (not contributing, house not in her name) is archaic!

SephirothX

Well this all makes it more difficult because I'd really rather not have my name on it.

My mum doesn't work because she has a bit of a disability (and gets a little DLA for it but not much) but it's nothing major or something that would get worse with time.

I guess I will just have to consider the advice given and make a decision. When I mentioned some of the risks last night before I went to bed they did seem to be going off the idea.

I can't help but think a better idea would be for me to buy the house outright without mortgage in about 10 years time when I would probably be in a much better financial position or even earlier depending on how my salary increases over the next decade. Problem is you can't sell it for 5 years without having to pay a lot of money back to the council so they'd be very old by the time they saw any profit to help out their retirement.

BobQ

SephirothX wrote: »

Well this all makes it more difficult because I'd really rather not have my name on it.

My mum doesn't work because she has a bit of a disability (and gets a little DLA for it but not much) but it's nothing major or something that would get worse with time.

I guess I will just have to consider the advice given and make a decision. When I mentioned some of the risks last night before I went to bed they did seem to be going off the idea.

I can't help but think a better idea would be for me to buy the house outright without mortgage in about 10 years time when I would probably be in a much better financial position or even earlier depending on how my salary increases over the next decade. Problem is you can't sell it for 5 years without having to pay a lot of money back to the council so they'd be very old by the time they saw any profit to help out their retirement.

If they do not want you to buy it jointly that is clear cut. In that case you could take the view that what you pay them should in some way equate to board and lodgings and make it clear that you will only pay this for as long as its convenient or set a time limit on it.

If its you that does not want the tie in to a mortgage then that is your choice. It will have an affect on the size of another mortgage you could get if you already have a mortgage commitment to another property but would not necessarily prevent you getting another mortgage if your income went up.

Of course if you did not end up buying your own home for say 5 years, you might regret not taking advantage of the opportunity to part own your parents house at a subsidised price.

Your choice......

japmis

SephirothX wrote: »

Third time I've said that now but I felt I had to reply to Hominu's fraud comment tonight as it's a big penisblock.

:rotfl:


Have you had anymore thoughts about which way you'll go?

Strapped

No.

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