Buying a house with parents

onlyroz

I'd like some opinions on the best way to deal with the following hypothetical situation.

Let's say that we (my husband and myself), and my parents, both sold our houses and then pooled the money to buy a larger place for all of us. My parents are mortgage free and we have 30-50% equity in our house with a £160k mortgage. What things would we need to consider? I'm thinking the key issues would be:

- What happens if a parent needs to go into a care home?
- What happens with inheritance? I have a brother who would presumably be entitled to some of the house equity on my parents' death.
- What happens if I die before my parents?
- Who should go on the mortgage?
- Who should "own" the house? E.g. just me and my husband, or some sort of split between us and my parents.

This is one of those things that sounds like a good idea in principle but could be beset with pitfalls. Are there any opinions from you clever people over whether this could ever work?

Tixy

Would the new house be bought outright? or would you still have a mortgage?

Other things I would add to your list
- what happens if you and your husband divorce (especially if only the 2 of you are named as owners)
-what happens if your parents divorce
-what happens if one parent dies and the other remarries
-what happens if any one of you is declared bankrupt
-if you will have a mortgage what happens if one/both of you lose your income and you are unable to keep up with mortgage repayments?
-what happens if 1 or 2 of the 4 of you want to sell/relocate

onlyroz

All good questions. We would need a mortgage for our "share" of the house.

I'm thinking that the most likely scenario for this ever happening would be if my dad died (his is quite elderly while my mum is younger and healthier). A "best case scenario" would then be that we would all live together until my mum passed on, and then we would be able to remain in the house. At that point I assume we'd have to give my brother a proportion of the equity if we wanted to stay.

Pixie5740

Would you all be on the deeds of the house? The mortgage lender might have a problem with that.

DaftyDuck

Have you considered buying two neighbouring terraced houses, thus gaining benefits of co-existence, yet keeping the two properties legally separate.

onlyroz

DaftyDuck wrote: »

Have you considered buying two neighbouring terraced houses, thus gaining benefits of co-existence, yet keeping the two properties legally separate.

For me the main benefits would be a bigger house and garden than I'd be able to afford on my own. I'm not sure how owning two terraces would achieve that unless we were to start removing fences and knocking holes in walls...

xylophone

The four of you would hold the property as tenants-in-common? http://www.thisismoney.co.uk/money/news/article-1594984/Tenants-common.html

This would mean that each party would own a specific share which could be left in that party's will as desired.

Legal advice should be taken.

The mortgagee might require all of you on the mortgage and you would be jointly and severally liable for the repayments?
If you and your husband could not pay the mortgage, could your parents?

With regard to your brother's inheritance, one parent might will his share of the house to you, the other to your brother?

To be fair to your brother, you would wish to be in a position to buy him out at this time?

Or perhaps your parents would wish to will all their other assets to your brother?

Or they might each take out an insurance policy with the proceeds written in trust for your brother?

onlyroz

All very interesting. So some scenarios - do these seem realistic?

1) Both parents die, their share of the equity is shared between me and my brother. If we can afford to buy him out we do so, otherwise we have to sell.

2) One parent dies and the other has to go into a nursing home. Would we have to sell the house to pay the fees? How would the care home figure out what proportion of the house equity belonged to them?

3) If my parents outlive me and my husband then our share of the house would go to our children. Then a decision would have to be made whether to sell the house or to continue to live there.

4) One of the couples divorces - much messiness but the house would most likely have to be sold and the equity shared out accordingly.

5) We become unable to pay the mortgage. So either my parents help us out with the repayments or we have to sell up and split the equity.

BitterAndTwisted

Have a read of GreenMan's thread about buying a mortgaged property using their parent's equity for a hint of some of things which could go wrong. Very, very badly wrong indeed.

Pixie5740

There are more and more of these threads appearing on MSE about people buying properties to live with their parents or in-laws. Personally I think it's a bit of a minefield...mixing family and money. I love my parents but there's no way I would get them to throw their lot in with mine so I could get a bigger garden.

How does your husband feel about living with MIL and FIL?

whodathunkit

onlyroz wrote: »

For me the main benefits would be a bigger house and garden than I'd be able to afford on my own. I'm not sure how owning two terraces would achieve that unless we were to start removing fences and knocking holes in walls...

The doesn't sound a very good reason for taking on what could be a rather challenging living situation.