Buying parents' house, dying Dad

BigAunty

Both your parents have debt issues! They've lumbered themselves with a loan (mortgage) that they probably can't hope to pay back by the time the term ends.

The Shelter website has excellent information for home owners about how to avoid mortgage arrears and repossession.

The debt free wanabee board is an ideal place for your mother to post her debt issues and get helpful advice. The Direct Gov website also has useful information on debt management. Look into a debt charity like Step Change for assistance. Never pay for debt advice.

On this board, we see lots of posts from family members where their joint ownership of a property causes massive relationship problems. What amounts to quite simple maintenance or occupant type issues get exploded out of all proportion because family has been mixed with business.

This includes quite a few posts where parents can't afford their current properties and drag their children into financially assisting them rather than take the sensible step of selling up and downsizing or moving into rented accommodation, which is what most people would do if they can't afford their current lifestyle and don't want to burden others with the impact of their poor money management.

The issues are anything from jealous siblings, the joint owner being emotionally blackmailed not to sell the property, the resentment from the person who bailed out the homeowner only to find that the person they rescued is not remotely grateful and so on.

What happens when you marry and have children but there's no room in the current property for your family but your mother worries you will make her homeless by selling up? You won't necessarily be able to afford a second mortgage for your new family. You will be stuck between a rock and a hard place. We have seen this type of issue before on the forum, the way that someone has bent over backwards to help their parents stay in their beloved property but its ruined the quality of their life because they've created a lifelong dependency.

EDIT - another thing to research is the sale of homes to fund care home fees. See the Age UK fact sheets to understand what could happen if you become a joint owner of a property and maybe 20 years down the line, your mother requires residential care. That's a risk you have to consider when owning a property with a parent.

duchy

Mattygroves2 wrote: »

You ned to find out or clarify a few things:

- is the property owned as tenants in common or joint tenants
- who does the life assurance pay out to if it is written in trust
- what other assets there might be in the estate to help settle the mortgage

If I was in your shoes I'd get my father to leave the property to my mother (assuming it is tenants in common) and let the life policy cover most of the mortgage. I would then raise enough money to pay off the rest of the mortgage by remortgaging my own house or using savings and then register a charge against my mother's house.

That keeps the house in the family for mother and younger siblings to live in, reduces your eventual CGT liability whilst ensuring you get your investment back when the property is eventually either sold or passes under your mother's will.

You then need to work with your mother to ensure she has enough money to live on and maintain the house when your father has gone. You haven't mentioned pension entitlement for example. Are you prepared to help her out whilst your siblings are still young ?

This is where it gets tricky.
Mum judging by the ages of the children is in her forties or fifties.
She could live another fifty years.
In a house far bigger than her needs once siblings are out in the world.
She works part time so is unlikely to have generous pension provision to live on yet will have at least partial responsibility for maintaining a property larger than she needs.
OP already has a new mortgage with the new affordability rules he may not even get a second mortgage.
What happens if OP can't afford two mortgages.....redundancy, illness, kids etc.
dad having a cough may mean something other than cancer which may debilitate him but not kill him. He really needs a diagnosis before plans are made for a scenario that may not even exist.

Not knowing if the property is held as tenants in common or not or it's implications and assuming an IOU takes precedence over a mortgage first charge on a property implies lack of understanding in the legalities by both Dad and eldest child. Mum could block any of these plans anyway as she is the joint owner. Anything would need her agreement.
Is the OP prepared to /can afford to wait fifty years to realise their investment or would they expect Mum to sell once the kids had left home.

My ex husband was involved in a similar scenario years ago. I told him it wasn't feasible but if he wanted to go ahead then at least get an agreement drawn up legally. He told me it wasn't needed as it was family. His Dad was sixty when he died his Mum was forty something and with two kids under eighteen still at home.
Despite the agreement....including the fact ex OH had paid their deposit and acted as guarantor on their mortgage his Mum simply refused.....within six months was dating and eventually sold the house and moved to a new area with the younger siblings and her new man. Ex OH got the deposit back and nothing else. Instead of the original agreement that he would get 25%.

So despite what the OP thinks I think of his motives (which I didn't think were totally pure as soon as the IOU was mentioned) I've seen first hand how these kind of arrangements can turn out. Every eventuality needs to be considered. It never occurred to Dad or son that Mum wouldn't remain single and when I suggested the possibility they dismissed it. Had my OH been so inclined it could have ripped the family apart...instead he didn't fight it but was very hurt by it emotionally as well as financially.