Buying a house with parents

xylophone

One parent dies and the other has to go into a nursing home

The parent who had died would either have willed the property to the other parent, or to you, or your brother or somebody else - the surviving parent would only own a certain percentage of the property value, possibly as little as 25% - I doubt that the local authority could force a sale in those circumstances?

Then the actual sale value of such a share in the property might be less than the percentage actually owned - how much would you be willing to pay for a minority share in a house owned and occupied by the majority shareholders?

http://www.ageuk.org.uk/Documents/EN-GB/Factsheets/FS38_Treatment_of_property_in_the_means-test_for_permanent_care_home_provision_fcs.pdf?dtrk=true see page 10/11.

If you have doubts about your ability to pay the mortgage and know that your parents could not, this might be a reason not to embark upon the scheme?

BitterAndTwisted

I wonder what the parents see as the main benefits for them by chipping in with the equity from their mortgage-free property?

I don't care how lovely all the parties are in this proposed contrivance, it has all the potential to end most unhappily and disastrously. For more reasons than I can count with both hands.

Jenniefour

Oh dear, yet another mix and match proposition. OP, if you want to go ahead, at the very least your parents should seek independent legal advice so they know what they're buying into, including finding out how to protect your brothers possible inheritance. I'm having a hard time understanding why your parents would want to do this, given their present situation and no indication of any pressing need that would make the radical changes you describe clearly advantageous for them.

Your parents need to be in a position where they are agreeing to/declining this proposal from a properly informed perspective.

Jenniefour

BitterAndTwisted wrote: »

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.

BitterAndTwisted - do you have a link for that please?

onlyroz

Jenniefour wrote: »

BitterAndTwisted - do you have a link for that please?

Yes, I can't find it either.

Firstly, this is very much a hypothetical situation. The time when we might consider something like this would be in a scenario where my dad had passed on and my mum was living alone. The advantage to all of us would be living in a larger house with a larger garden, where we could all help each other out as required. I would not consider this unless the house was big enough to give everybody their own space (I suppose a house with a self-contained annexe would be ideal, or perhaps with a more secluded wing which my mum could occupy).

I also have no intention of diddling my brother out of any inheritance, shirking responsibility with regard to taxes or care home fees, or spiriting away any of my parents' assets.

As for mortgages, I wouldn't imagine that our mortgage would be much bigger than it is now and so it would be no less affordable. If we combined our assets and kept our mortgage a similar size we'd be looking at a property in the £650-700k range, which round here would easily get you a 5 bed detached property with a large garden.

But this sort of situation is something I'm hearing more and more about. My mum was telling me that more than one of their friends have bought a property with their children for these exact reasons. It sounds like there are a lot of legal issues to address, but it could potentially work. It does seem a shame that the "system" is set up to make things difficult for multi-generational families to live together, because in a world with ever increasing house prices and population the idea makes a lot of sense.

Annisele

onlyroz wrote: »

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.

I think you might hit insurmountable problems long before you get to that point.

If you're buying a house using your parents money (even if you're only using it for only part of the deposit), then most lenders will insist that either:

• Your parents gift you the money. In that case, it would have to be a geniune gift, with no expectation of any return, and no expectation they'll be able to live in the house with you. OR
• Your parents go on the mortgage too - which may limit term based on their ages, and have a knock on impact on affordability.

A joint mortgage with four parties would also be an issue for some lenders. If you plan to go ahead with this, then I think you'll either need a broker or to do a *lot* of research (and even then I'm not sure you'll find a lender prepared to do it).

So far as Greenman's thread is concerned, he asked for it to be removed from MSE - I believe for legal reasons. (See here)

Mojisola

Jenniefour wrote: »

BitterAndTwisted - do you have a link for that please?

This is part 2 of the terrible saga - https://forums.moneysavingexpert.com/discussion/3820335