Buying parents home for amount they owe on their mortgage

Charli22

My parents are in financial difficulty and their home (where I also still live) may soon be repossessed due to them having to come off an interest only mortgage they negotiated with their mortgage provider because of their circumstances. They have now come to the end of this agreement and the mortgage company will not extend it. My parent owe just under £170k on their mortgage. My questions are as follows:
1) is it legal to do this? I.e. buy my parents home for £170k
2) if it is legal, would I need a cash deposit for the mortgage when the market value is £240k and I would be purchasing for £170k so 70% LTV? It is not a problem if I do as I have enough savings for a 10% deposit.

Thanks in advance for any help/advice given

anselld

It is legal, yes. But if you have enough for 10% deposit why not help them pay the mortgage? Have you been paying rent and a contribution to bills?

Mojisola

Your parents may have problems in the future claiming means tested benefits because they will have, in effect, given away £70k.

Charli22

Yes I am currently paying rent but their mortgage has gone from around £250 a month on the arrangement to £1600 due to the length of time left on their mortgage. I think My money would be better spent buying the home to bring the mortgage down to a more realistic amount

kingstreet

You can, but they will be unable to continue to live in it.

A family purchase at undervalue will not allow the "donor" to continue to live in the property.

If you can get a 90% mortgage alone without the gifted equity, then remortgage in a year or two, to get a better rate due to the " real" loan to value, that might be your best option.

Is there any reason why they are not selling the property so they can at least come away with the bulk of their £70k equity? Giving it to a lender, or giving it to you - they still lose it!