Paying off my parents' mortgage...

00ec25

Frizzylogic wrote: »

This is very helpful. You're right, I don't have a deposit however I could probably raise one - I have some savings in a credit union and can borrow 3x what I've saved - which would (just about) cover a deposit.

you misunderstand how lenders calculate your borrowing limit
the lender will ask you to prove where the deposit money can from. If it is in fact a loan from a CU then the loan will be included in the calculation and the amount you can borrow on the mortgage will be reduced accordingly on the basis you already have a loan

a deposit must be from savings or an outright cash gift, if from another loan it will have have repercussions

Frizzylogic wrote: »

However if they can't continue to live there that makes the whole thing moot.

I'm not saying they can't live there, what I am saying is the number of lenders who will accept your circumstances is few in number. You may well get a mortgage from one of them, but it will cost you more because they will charge you more, if you can afford that extra then no problem, if you can't then they won't lend to you anyway

Frizzylogic

00ec25 wrote: »

you misunderstand how lenders calculate your borrowing limit
the lender will ask you to prove where the deposit money can from. If it is in fact a loan from a CU then the loan will be included in the calculation and the amount you can borrow on the mortgage will be reduced accordingly on the basis you already have a loan

a deposit must be from savings or an outright cash gift, if from another loan it will have have repercussions

I'm not saying they can't live there, what I am saying is the number of lenders who will accept your circumstances is few in number. You may well get a mortgage from one of them, but it will cost you more because they will charge you more, if you can afford that extra then no problem, if you can't then they won't lend to you anyway

Ah. I see. What if it was a 'gift' from my parents? Would that be a problem?

I'll make an appointment to see a mortgage advisor next week. I really am utterly clueless here!

PasturesNew

Frizzylogic wrote: »

I have some savings in a credit union and can borrow 3x what I've saved - which would (just about) cover a deposit.

You can't borrow for a deposit. The cash has to be yours, not a loan.

Frizzylogic

PasturesNew wrote: »

You can't borrow for a deposit. The cash has to be yours, not a loan.

Do I have to tell the bank that? Would there be repercussions if they found out? How would they find out?

PasturesNew

If your parents were going to sell to a developer then there's no emotional ties there as they were looking to sell for it to be demolished.

I'd go down the route of having some estate agents round to discuss how much the house is actually worth, bearing in mind the plot potential. I might then decide to go down the planning permission route to build two houses ...... and if the maths had stacked up to this point, flog it, bank it and leave.

Parents can buy a nice little place for cash ......

What other houses have sold for in the past is not an indication of what your house is worth today, especially as there's been interest in the past to use it as a plot. So worthwhile at least investigating the options rather than trying to come up with expensive/complex ways for you to all continue to tie yourselves to a house that your parents had already decided they didn't want to live in any more.

PasturesNew

Frizzylogic wrote: »

Do I have to tell the bank that? Would there be repercussions if they found out? How would they find out?

This is how it goes ....:
"Good morning Frizzylogic, so you want a mortgage. Wonderful"
"Here's the form ... right, let's get cracking ...."
"How much deposit have you got?" "Lovely"
"Where did that money come from? ..... produce evidence of its source...." "Aaaah...... well .... er ... no".

Frizzylogic

PasturesNew wrote: »

If your parents were going to sell to a developer then there's no emotional ties there as they were looking to sell for it to be demolished.

I'd go down the route of having some estate agents round to discuss how much the house is actually worth, bearing in mind the plot potential. I might then decide to go down the planning permission route to build two houses ...... and if the maths had stacked up to this point, flog it, bank it and leave.

Parents can buy a nice little place for cash ......

What other houses have sold for in the past is not an indication of what your house is worth today, especially as there's been interest in the past to use it as a plot. So worthwhile at least investigating the options rather than trying to come up with expensive/complex ways for you to all continue to tie yourselves to a house that your parents had already decided they didn't want to live in any more.

This is definitely an option - I've asked them to get a few valuations from Estate Agents. If the house is worth enough to sell to clear the debt and buy somewhere else then I'll definitely be pushing that as a solution.

You're right that the emotional ties to the place aren't going to stop them downsizing - they're not particularly sentimental and it's a large house that requires more upkeep than they will be able to provide as the get older - but it's a great house, honestly I think their heads were just turned by the amount of money the developer offered. They didn't put it on the market or anything - the guy knocked on the door and made the offer.

Frizzylogic

PasturesNew wrote: »

This is how it goes ....:
"Good morning Frizzylogic, so you want a mortgage. Wonderful"
"Here's the form ... right, let's get cracking ...."
"How much deposit have you got?" "Lovely"
"Where did that money come from? ..... produce evidence of its source...." "Aaaah...... well .... er ... no".

What about if it was a gift from my parents?

00ec25

Frizzylogic wrote: »

Do I have to tell the bank that? Would there be repercussions if they found out? How would they find out?

the lender will requyired a signed letter from your parents confirming the money given to you is a gift, ie it is not repayable under any circumstances

you personal ethical standard may be that you decide to lie, get such a letter signed (by your parents) and then pay them back in secret at a later date

you would probably get away with that as the lender has no right to inspect your or your parents bank accounts, however the fact you are looking for ways around the deposit issue says more about you than I care for

Frizzylogic

00ec25 wrote: »

the lender will requyired a signed letter from your parents confirming the money given to you is a gift, ie it is not repayable under any circumstances

you personal ethical standard may be that you decide to lie, get such a letter signed (by your parents) and then pay them back in secret at a later date

you would probably get away with that as the lender has no right to inspect your or your parents bank accounts, however the fact you are looking for ways around the deposit issue says more about you than I care for

Ouch. If my parents have sufficient savings (which I'm not even sure they do) to gift me enough to cover a deposit to pay off their mortgage and allow them to live rent free in their home for the remainder of their retirement I can't see them looking for me to pay that back.

However my personal ethical standard would dictate that lying to a bank and making sure I return that (purely hypothetical) money to the people who raised me - is very much the lesser of two evils here.

So judge away - Judgy McJudgerson.