Paying off my parents' mortgage...

Annisele

The problem isn't really about whether your parents expect you to pay the money back - it's about whether they're expecting anything in exchange.

You are describing a scenario where your parents give you a "gift" in exchange for the right to live in the property rent free for the rest of their lives. That's not a gift - that's an exchange of one valuable thing for another. If you declare that to the bank, they won't give you a mortgage.

(There was a thread on here recently where somebody tried to do what you're talking about - without declaring to the bank - and it went very badly wrong. Her parents won't let her live in the house and won't contribute anything, but she can't afford the mortgage. So, she might end up having the house her husband and children live in repossessed).

Frizzylogic

Annisele wrote: »

The problem isn't really about whether your parents expect you to pay the money back - it's about whether they're expecting anything in exchange.

You are describing a scenario where your parents give you a "gift" in exchange for the right to live in the property rent free for the rest of their lives. That's not a gift - that's an exchange of one valuable thing for another. If you declare that to the bank, they won't give you a mortgage.

(There was a thread on here recently where somebody tried to do what you're talking about - without declaring to the bank - and it went very badly wrong. Her parents won't let her live in the house and won't contribute anything, but she can't afford the mortgage. So, she might end up having the house her husband and children live in repossessed).

That's all I needed to know - I suspected that there might be some conflict of interest there, which is why I asked. I have no desire to game the system or get one over on the banks. I'm just trying to figure out the best way to ensure my parents can enjoy their well earned retirement without money worries hanging over them and I was thinking out loud.
I let that comment about my personal ethics get my back up - I apologise if I was over-sensitive. It just jarred me a little, I don't think of myself as an unethical person. I try very hard to be decent.

xylophone

I don't quite understand all this - on the one hand you say

My Mum does not like this idea - they both still very hale, hearty and active. Plus she doesn't want to leave the family home - they have been there nearly 40 years now.

and then

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 -

The house is too big for your parents now, let alone in the future?

Have you actually checked the current value of the house? If, as you say

it's a great house,

you won't be the only one to see the attraction?

Have you actually checked out whether there is development potential?

If at all possible, would be far better for them to sell now, buy an easily maintained property and enjoy their retirement while they have abundant health and strength?

Frizzylogic

xylophone wrote: »

I don't quite understand all this - on the one hand you say



and then



The house is too big for your parents now, let alone in the future?

Have you actually checked the current value of the house? If, as you say
you won't be the only one to see the attraction?

Have you actually checked out whether there is development potential?

If at all possible, would be far better for them to sell now, buy an easily maintained property and enjoy their retirement while they have abundant health and strength?

I know, it's not logical, I've pointed this out - but when have people been logical? The developer offered them a huge sum and my Dad talked her into it at the time. Now she's faced with the prospect of leaving her home for a small, terraced house in a less salubrious area (which is what I know she is imagining) she has cold feet.
I have insisted that they get three valuations and she has agreed to that. Once we know how much the house is likely to fetch and look at what she can afford with the profit she might feel happier.

From what you are all saying it's looking like this really is the best option. I just needed some advice - I have no experience in this area at all and wanted to explore all avenues. This has been helpful. I know what the next steps to take are at least.

Pixie5740

If you borrow money for the deposit then that will show up on the credit searches the mortgage lender does on you.

Annisele

Unless your parents are vulnerable in some way, I think the next steps are probably for them to think about.

I'm guessing they asked you to help in the first place (otherwise my parents would be unimpressed if I insisted that they get their house valued). It sounds like what they really need to decide is whether they want to keep the house - from what you say, they can't even make their mind up on that right now!

I think you're right to say that looking at other properties in their price bracket may concentrate their minds, but be careful not to push them on it. It's a big decision, and if you did push/insist then they could very well end up resenting you if they end up somewhere they regret.

Frizzylogic

Annisele wrote: »

Unless your parents are vulnerable in some way, I think the next steps are probably for them to think about.

I'm guessing they asked you to help in the first place (otherwise my parents would be unimpressed if I insisted that they get their house valued). It sounds like what they really need to decide is whether they want to keep the house - from what you say, they can't even make their mind up on that right now!

I think you're right to say that looking at other properties in their price bracket may concentrate their minds, but be careful not to push them on it. It's a big decision, and if you did push/insist then they could very well end up resenting you if they end up somewhere they regret.

Yes, they did bring the idea up. I had no clue they even had a mortgage anymore until they tentatively made the proposal that I buy the house and THEY pay off the mortgage on it. It's the fact they're not paying off any of the capital on the current loan that bothers them. It bothers me that they're spending their pension on this when I assumed they were mortgage free - it can't be easy for them financially. That's why I was considering moving back in and paying it myself - they never asked me to do that. I think they feel bad because they see the house as my inheritance. I don't give a monkeys about that. I just want them to be secure and not struggling. The simple fact they even brought it up is what worried me - it's very unlike them to ask me for anything. It worries me.

There's no fear of me pushing them into any decisions - they're not easily bossed around! I'm going round for dinner tomorrow and I'll have a frank discussion with them about just how bad the situation actually is. I may be building it up in my mind to be worse than the reality. The conversation was kind of sprung on me and I didn't have the presence of mind to ask for all the facts at the time.

Thanks again for your advice and comments. This has really helped me to clarify what I need to do now. I was utterly confused yesterday!