Buying Parent's House

Bschooli

Hi
I have searched the forums but can't seem to find what I'm looking for and hope someone can help me.

The term of my parent's mortgage is due with £61k left on £200+k home. My Dad still works at 75 and is fit and healthy. He doesn't want to retire or sell their home and I don't want to see them move either.

What are my options when it comes to buying their home. Do I have to pay the value of the property or can I get a mortgage to pay off their loan amount?

Any help greatly appreciated.

John1993_2

Your parents can sell for any price that they like, as long as it will raise enough money to pay off any debts secured on it.

The bank's only interest in thiis is that they have the house papers as security on what they've lent. Once they are paid back, they are fine.

Edited to add, there may be other issues such as inheritance tax, benefits changes etc that someone else would need to advise you about. It can be about much more than just the mortgage.

Bschooli

Thanks for that, John.

holly_hobby

Not quite .... you can't actually buy their home off them and they remain resident, if you require a mge to facilitate the exercise.

From your parents lender's point of view, as long as they are repaid thats all they want.

However, there are several issues from your angle and any mge requirement, if the current owners (Dad etc) are not to be party to the mge, whilst remaining resident post sale to you ( which is obviously the object of the exercise).

The main issue that will prevent the lender from agreeing to lend on this basis is that they will require vacant possession (ie the vendor will no longer reside there post completion), which is in relation to complications in may cause in any future possessionary hearing - so from a lenders point of view, that arrangement would be out.

There is only one way to do it (ignoring lifetime mge arrangements), to which given Dads age, and assuming your income is solely sufficient to svc the mge and your other commitments, would be for you all to be joint mortgage applicants, you go as main (1st) applicant (due to you being the lead income), which means that if Dads income isn't reqd, his age and a very restrictive term won't be an issue for some lenders.

If Dads income is reqd, then there are lenders whom will exceed the typical 75 yrs max age (but its a smaller pool), and of course his income must be proven as sustainable throughout the term of the mge itself.

If you want to base the mge on just your income (freeing you from restrictions re Dads age), with Dad/parents remaining on the deeds and party to the new mge (to circumvent the vacant possession issues), this exercise is technically a simultaneous transfer of equity (ie adding you onto the deeds) and remortgage application (as Dad already holds title).

I am also assuming that the new mge arrangement would also be on a repayment basis ? If not, most lenders will look for an independent (ie separate to selling the property) repayment vehicle/plan - although given the low LTV and other aspects of the c case there may be some flexibility on this, but no gte.

So, yes there are solutions, little bit messy, but dependant upon the figs etc, is perfectly placeable ..... obviously this is one for a mge broker, who should be able to place this without too much labour.

I am guessing from your post, that your parents estate is unlikely to exceed 650k on 2nd death (assuming full unused spousal tsf availalbe) ? If so, you don't need to worry about IHT or GWR/POAT regs the exercise could ignite.

Hope this helps

Holly

Bschooli

Holly, sounds good advice and makes sense. I guess I just need to find a lender and broker to meet our needs.

Mojisola

Bschooli wrote: »

Hi
The term of my parent's mortgage is due with £61k left on £200+k home. My Dad still works at 75 and is fit and healthy. He doesn't want to retire or sell their home and I don't want to see them move either.

What are my options when it comes to buying their home. Do I have to pay the value of the property or can I get a mortgage to pay off their loan amount?

If you can get round the other problems, there's still the issue of your parents having given you the equivalent of a lump sum which may be taken into account if either of them need means tested benefits or care - read up on deprivation of capital.