Considering paying off part/all of mother's mortgage

SlightlySmart

My mum is 52, and has around £14k/10 years left on her mortgage. The house is worth £150k. As I'm in a much better financial situation than her (cash wise, not asset), I'm considering contributing towards paying it off partly or completely.

The background is that my parents divorced about 20 years ago, mum was left with me & siblings and practically £0. My siblings an I have always got along well with both, and we saw our dad regularly. My parents practically never saw or talked about each other since the split; they don't like each other but there isn't outstanding hatred. 15 years ago, my mum took out a mortgage to buy a house for us.

Fast forward to now, I am 25 and have been fortunate enough to do well in uni and have had a good job for the past few years (currently £31k/yr). This leaves me in a much better financial situation than any of my parents or siblings. My dad always worked a reasonably good job and is comfortable, my mum worked an average job (after the separation) and always put others ahead of her self, one sibling is working an average job, the other at uni.

Through work of some sort since I was 15, and being generally frugal I now have about £38k in savings, increasing by about £650 a month at the moment. Some of that is allocated as an emergency/6mths expenses fund, and for retirement (no pension started yet).

I'm in a stable job, career is going well so no worries there. Living in a rented flat. Single and likely to remain that way for the foreseeable future. I do quite a specialist (but in demand) job, so no plans to buy a house to tie me down in one area for the foreseeable future either.

I've had it on my mind for the past few years to put something towards my mum's mortgage to ease the burden on her, given that I could. I've also started feeling a little bit uneasy amassing savings and living a nice life (holidays abroad, considering buying a £7k car etc., but not extravagant though) while knowing what else the money could do.

The company she worked for recently went bankrupt, leaving her unemployed - this got me thinking again about doing something. She's finding it hard to find a job (always does due to low interview confidence), but is managing off Jobseekers, live-in sibling board contribution (yes, it's declared), and small amount of savings. I've assured her not to ever worry about making ends meet, as I'd be happy to cover any shortfall.

So about what I do (if anything):

Offer to pay some of it, all of it? All of it would be 37% of my current money, or to put it differently my entire savings amount for 1 year and 10 months - this feels like too much...
1. 
   Don't offer at all? She does after all have the house, which is a £150k asset. And paying off a significant amount or all of it will set me back personally (but I have no plans to spend much of it any time soon).
2. 
   Offer to cover the mortgage until she finds a job?
3. 
   Offer to pay back the £3k she gave me while I was at uni. I did make clear at the time I didn't need it.
4. 
   Gift, informal, or legal agreement so I get it (%-based of value, or fixed amount) back when she dies? If I pay it all off, would have to be the latter as it's so much money. If an informal loan for part of amount, the legal fees may be too much (have heard £1k as a figure - thread 3354900 here, can't post links as a new user) ?
5. 
   If a gift or informal, I'd rather my siblings not benefit from this although we are all friends. For example I think might be a bit annoyed if in 5 years mum sold the house and gifted thousands of pounds to my sibling towards a wedding or their own house deposit. The gift in effect would be from me.
6. 
   My dad probably wouldn't be happy if he found out I paid some/all of it. Not the fact he wouldn't be getting any - more that my mum would be getting something. He doesn't know anything about my financials, but wouldn't like for my mum to be benefiting from anything. He also did pay about £3k (so did mum) to help me through uni (could have done without it, which I made clear at the time), so if I gave mum some amount, £3k of it would effectively be from him. But I'd be happy to keep it between mum and I, or mum and siblings (but that's riskier, who knows what the future will bring).
7. 
   My mum is very proud, I have a feeling she'd say no thanks or even be upset if I offered. She rejected her parents' offer to pay off her mortgage a couple of years ago (they saved well over their lifetime, paid in to good pension schemes). She was upset when 15 year old me said I was saving up to go to uni, she thought I should just enjoy myself and not worry and it was her that should be concerned about uni money. When I recently said not to ever worry about making ends meet, she said no that isn't what you went to uni for and go to work for, not so I could give money to her.

Thanks for reading (it was a long one...), I'd appreciate hearing what you think or of any similar experiences.

Alphamare

At the very least I would have given her back the 3k as soon as she lost her job

Goldiegirl

My suggestion isn't in the poll.

Talk to your mother about it.

JJB51

Honestly I would just pay it all off for her without asking for anything drawn up in her will. My situation is similar to yours apart from you make allot more

You only have 1 mother and it sounds like she has done a great job bringing you all up in not the easiest of circumstances. It doesn't sound like paying it all would put you in any problems and you have a long working life with good prospects ahead of you.

Chances are you will get all your money plus substantially more back in her will in the future. You can always earn more money. The feeling of helping a struggling parent is priceless.

It is allot of money and its your call but that is what I would do in a heartbeat.

getmore4less

£14k over 10 years is probably between £125(1.4%) and £150(5.2%) is that a struggle for her normally? Ok there is a temp blip.

You have quite a few concerns about others finding out benefiting.

what if you pay/help and she reduces your siblings board would that bother you?

Simple solution to part of the problem is offer both your parents back the help they gave you just be insistent.

Any penalties for overpayment, find out the account and overpay for her with the £3k if she won't take it. that would reduce the payment by £30ish or shorten the term to around 7.5 years if she stayed paying the same.

amnblog

Goldiegirl wrote: »

My suggestion isn't in the poll.

Talk to your mother about it.

Nice one

Unless you want to offend mum tell her you are concerned about her and ask her how you can help?

waveneygnome

Wife & I were in a similar/almost identical position to you 12 yrs + ago.......except we had 2 mothers mortgages to consider, but both around the 10k mark.

We both have siblings, but they were unable to help financially.

We bit the bullet and paid off both their mortgages.......we actually did this in secret, so that when they next got a statement there was a very nice surprise for them. We left £100 on each mortgage so that the BS held the deeds (not sure if that's still good advice?).

We never told either of the dads (also divorced) as financially there were both better off & with new partners.

Looking back it was one of the best decisions we ever made. It gave them so much confidence/security knowing that they had no mortgage, and meant that the money they saved on mortgages could go on the nicer things in life like holidays.

We 'gave' them the money, no strings/expectation of repayment. We did tell our siblings, only because we wanted to make it clear we didn't expect anything or wanted them to feel we had a 'hold' over our mothers houses. After 12 years, I'm pretty certain our siblings will have forgotten we even did it...........................but our mothers haven't...................

I wouldn't say it increased the bond between us all - as we were always a close family - but I know our mothers really really appreciated the gesture.

Now that we're parents, we can't wait for our children to grow up, get good jobs and pay our measly £250k mortgage off for us.

That's unconditional love.

SlightlySmart

Thanks for your responses so far.

amnblog wrote: »

Goldiegirl wrote: »

My suggestion isn't in the poll.

Talk to your mother about it.

Nice one

Unless you want to offend mum tell her you are concerned about her and ask her how you can help?

Of course I'll be talking to her before doing anything. I'm just looking to explore the options and considerations, and hear others' experiences before I bring it up.

Jbennett51 wrote: »

Honestly I would just pay it all off for her without asking for anything drawn up in her will. My situation is similar to yours apart from you make allot more

You only have 1 mother and it sounds like she has done a great job bringing you all up in not the easiest of circumstances. It doesn't sound like paying it all would put you in any problems and you have a long working life with good prospects ahead of you.

Chances are you will get all your money plus substantially more back in her will in the future. You can always earn more money. The feeling of helping a struggling parent is priceless.

It is allot of money and its your call but that is what I would do in a heartbeat.

Thanks. My main aim with a legal agreement would be to ensure that it's only her that would benefit. See my point 6 about potential gifts to siblings for weddings/houses if she downsizes her house. Also I've just been reading that if she ever had to sell the house to pay for care it would just mean that government payments for care would start later - I absolutely do not want to do the treasury a favour by saving them £14k (see thread 3354900).

getmore4less wrote: »

£14k over 10 years is probably between £125(1.4%) and £150(5.2%) is that a struggle for her normally? Ok there is a temp blip.

You have quite a few concerns about others finding out benefiting.

what if you pay/help and she reduces your siblings board would that bother you?

Simple solution to part of the problem is offer both your parents back the help they gave you just be insistent.

Any penalties for overpayment, find out the account and overpay for her with the £3k if she won't take it. that would reduce the payment by £30ish or shorten the term to around 7.5 years if she stayed paying the same.

Not a struggle normally when working, although she lives a basic life, 15 year old car, no holidays away etc. It's not a struggle now as she has a small amount of savings. It's mainly that I could help and would like to.

I think I could live with my dad finding out if he ever did. Yes it would bother me if she reduced sibling's board, but I doubt that would happen.

I don't want to give back to my father (but I would if he ever came into need), he has a reasonably good job, savings, pensions and £400k+ in assets with his new partner. Also he would certainly reject due to above reasons and pride.

Thanks too for the numbers and technical advice.

waveneygnome wrote: »

Wife & I were in a similar/almost identical position to you 12 yrs + ago.......except we had 2 mothers mortgages to consider, but both around the 10k mark.

We both have siblings, but they were unable to help financially.

We bit the bullet and paid off both their mortgages.......we actually did this in secret, so that when they next got a statement there was a very nice surprise for them. We left £100 on each mortgage so that the BS held the deeds (not sure if that's still good advice?).

We never told either of the dads (also divorced) as financially there were both better off & with new partners.

Looking back it was one of the best decisions we ever made. It gave them so much confidence/security knowing that they had no mortgage, and meant that the money they saved on mortgages could go on the nicer things in life like holidays.

We 'gave' them the money, no strings/expectation of repayment. We did tell our siblings, only because we wanted to make it clear we didn't expect anything or wanted them to feel we had a 'hold' over our mothers houses. After 12 years, I'm pretty certain our siblings will have forgotten we even did it...........................but our mothers haven't...................

I wouldn't say it increased the bond between us all - as we were always a close family - but I know our mothers really really appreciated the gesture.

Now that we're parents, we can't wait for our children to grow up, get good jobs and pay our measly £250k mortgage off for us.

That's unconditional love.

That was a very nice gesture of you, personally I wouldn't do it in secret though.

I think I would let my siblings know, as we are all close. I don't want any power, authority or "hold" as you say from doing this - just want her to benefit and no one else (most importantly, the treasury).


I'll keep pondering over these ideas and have a chat with her soon.

getmore4less

anniec19 wrote: »

My thoughts were to offer her a % of the property in return so that it is an investment for her. We would not register a charge on the property or amend the title at the land registry. I was hoping to get a solicitor to draw up some sort of agreement for us. That way it's an investment for her but also helps me out too.

With a potential CGT liability when the place is sold.

getmore4less

SlightlySmart wrote: »

I think I would let my siblings know, as we are all close. I don't want any power, authority or "hold" as you say from doing this - just want her to benefit and no one else (most importantly, the treasury)

If you help her it will put her in a position where she can be more generous with others if she wants.

You need to resolve that conflict in your head and if you help her, what she does next is her business not yours.

She will be paying off the £14k anyway so the care home logic is flawed, what she will have is £125-£150pm extra for 10 years.

I think it helps to only help/loan where you can consider the help as an unconditional gift with no strings, anything you get in return(even in the case of "loans") is a bonus.

Only give what you can afford absolutely.


Another angle is you feel you owe both your parent the £3k they used to help you, ofer your dad £3k and when he says no you can say OK I will give it to mum she needs a bit of help now, so she gets £6k and can either cut the mortgage payment/term or save/spend it.

SlightlySmart

@getmore4less yep I'm coming round to thinking this way now, I don't want control or influence from this so I'll have to leave the others-benefiting issue.

getmore4less wrote: »

She will be paying off the £14k anyway so the care home logic is flawed, what she will have is £125-£150pm extra for 10 years.

I might be missing something, as I don't see how it's flawed. I hope the situation won't ever happen anyway, and also I'm going off this whole legal agreement idea generally - but I'm interested to understand what the flaw is anyway.

If she pays off the mortgage, the entire value of her estate could go to fund care, with example figures this would be £150k of her money. If I pay off part and register a charge on the house for that amount, then e.g. £136k could go to fund care, and I get the £14k back.

In the first case (going to extreme), eventually she ends up with £0, I end up with £0, £150k goes on care. In the second case, she £0, me £14k, £136k on care.


After some thoughts and calculation, I'm going more now toward paying what she gave me back with interest at inflation rate, plus a large unconditional gift. Not paying it all off, but shorten considerably and save her thousands in interest over the period.