Buying parents' house, dying Dad

Newlyboughthouse

Hi all. Bit of a complex one but bear with me! My parents owe £150k on their mortgage, and Dad probably hasn't got long to live - he is 60 and probably has lung cancer going by his horrific cough (his Dad died of lung cancer at 60). He won't go to the doctor as does not want to know. He just wants to enjoy life and when it's his time, it's his time. My mom is totally clueless with money and constantly gets herself into debt (just for background info for later), the mortgage is half in her name just on paper - she would be happy with whatever me and Dad decide I think.

We all want to keep their house in the family because he put a lot of blood sweat and tears into doing the house up. It is beautiful and we would hate to see it go to someone else, particularly as my young brother and sister have grown up and live there.

If Dad were to die, he says his life insurance will pay off £100k. Mom is not in a position to pay the mortgage with all her financial problems, so would be forced to sell the house.

What if Dad were to leave to house in the will to me? He would obviously only be leaving his half right? What would I be liable for?

What if I bought my mom's half?

The other option we have discussed is for him to sell the house to me. He would sell it to me for £152k enough to pay off mortgage and legal fees, and I would IOU him up to the value of the house, which would be paid by him living there rent free for however long it takes.

The thing I can't get my head round is which option would be most financially savvy for myself? I'm thinking leaving it in the will would save me from taking out the big mortgage (I am already paying the mortgage on my own house). Am I right? Not au fait with any legal implications so any legal eagle/finanical advisor input would be a huge help here.

Thanks in advance

whitewing

How would your brother and sister feel when the house eventually belonged to you? Would it be difficult to convince them that you hadn't benefited at their expense?

You may need to check if dad's insurance payout is classed as part of his estate. If not, that may affect what you can do.

duchy

If your Dad dies owing money on a mortgage then that debt will need to be paid. If the mortgage is joint then they will owe that money jointly. Your Mum would either need a mortgage herself for the outstanding loan (would she get one? She'd need to be in employment and you don't say how old she is.)

Your idea makes no sense....if you want to buy your Dads share you need to pay for it with real money .

He can't sell the house without satisfying the first charge on the house......or in plain English when he sells the house he has to clear her mortgage....An IOU wouldn't be acceptable. You already have a mortgage ,do you have the equity to remortgage to cover the 153k?

Surely if keeping the family home is the aim...... When your Dad dies the life insurance pays off 100k leaving 50k shortfall. At that point you borrow 50k against your own property or from savings pay to buy a share from your Mum enabling her to clear the mortgage?

Alternatively your Dad effectively disinherits his younger children in your favour and you inherit his half of the house .......Do you know for sure that they are tenants in common or not. Full ownership could pass to your Mum automatically upon his death anyway depending on if they are or not. If it does she could either sell up and clear the mortgage or you could buy a portion and she could continue to live there.......however if you expect her to pay rent on the portion you own she'd probably be better off not selling to you and renting elsewhere and not have maintain acne expenses.

Then she can live her life out in the house and leave the rest of the house eg two thirds to all three children in whatever percentage she chooses. This is assuming she wants to keep the house and doesn't later wish to downsize when the younger children leave home. How old are they? In their twenties?

It all sounds like some kind of scam to be honest.

Maybe you should just move in and escape your throat clearing neighbours instead

Newlyboughthouse

whitewing wrote: »

How would your brother and sister feel when the house eventually belonged to you? Would it be difficult to convince them that you hadn't benefited at their expense?

You may need to check if dad's insurance payout is classed as part of his estate. If not, that may affect what you can do.

Brother is 9 and sister is 12 at the moment. We are a tight family.

I would officially buy the house for £152k, which pays off the mortgage and any legal fees. The IOU is for the remainder of what house is actually worth (last valuation £180k)

Newlyboughthouse

duchy wrote: »

If your Dad dies owing money on a mortgage then that debt will need to be paid. If the mortgage is joint then they will owe that money jointly. Your Mum would either need a mortgage herself for the outstanding loan (would she get one? She'd need to be in employment and you don't say how old she is.)

Your idea makes no sense....if you want to buy your Dads share you need to pay for it with real money .

He can't sell the house without satisfying the first charge on the house......or in plain English when he sells the house he has to clear the mortgage....An IOU wouldn't be acceptable.

She would no way get a mortgage. She is a part time supermarket worker and has extremely poor credit.

TheCyclingProgrammer

There are so many implications and ways about this I think you'd be better off getting professional advice but here's my take.

The value of your Dad's share means that IHT is unlikely to be an issue. If he left it to you, when he died his insurance would clear 2/3 of the mortgage leaving you and your Mum as joint owners and your Mum owing £50k on a mortgage.

You could then buy your Mum's share for market value - £90k. This would clear the mortgage and leave your Mum with a reasonable chunk of cash after selling costs. There would be no stamp duty to pay for you and no CGT implications for your Mum.

This assumes you can afford to pay £90k for her half or take out a mortgage to cover it.

The main complications I can see with this plan is that if your Mum continues to live there will she pay you rent or will you let her live there rent free? Will the mortgage company be happy with this? Will you need a buy to let mortgage or not? Also, could deprivation of assets become an issue. All things to think about.

The IOU idea sounds like a non starter to me.

Newlyboughthouse

TheCyclingProgrammer wrote: »

The IOU idea sounds like a non starter to me.

Ok this is just a personal arrangement and not actually relevant - more background info I guess so please ignore this fact

So it looks like him leaving it to me in the will is the way to go?

MysteryMe

Seeing as there has not been any professional diagnosis that the father is even likely to be dying in the short term this thread is very odd!

duchy

Ah but so is complaining your neighbour coughs too loudly .......same poster lol

whitewing

How big are your mum's debts?

Wouldn't it be better for your dad to get a diagnosis so that (hopefully) the family, including your siblings, can get support from an organisation such as MacMillan?

There may be other solutions or needs or decisions if everyone gets individual support appropriate to them. Are your siblings aware that your dad may be dying?

Mojisola

Newlyboughthouse wrote: »

My parents owe £150k on their mortgage, and Dad probably hasn't got long to live - he is 60 and probably has lung cancer going by his horrific cough (his Dad died of lung cancer at 60). He won't go to the doctor as does not want to know.

Would he be able to get an insurance policy to cover the rest of the mortgage as he hasn't been seen by a doctor and doesn't have a diagnosis? You can get some that don't require a medical.