Buying Parent's (Mortgaged) House

autaven

Looking for some advice on buying my parent's house.

Thanks for all the information guys - I deleted the information as I didn't want this stuff left on the internet for people to see. It was simply a discussion for a later date Thanks again!

BitterAndTwisted

Why would people looking to down-size be thinking about gifting you £27,000 when they could sell up and have that sum in cash? That sort of money could pay rent on a suitable property for several years.

autaven

They'd like to do it to enable themselves to be mortgage free. Otherwise they have another 15 years to pay on their mortgage.

Also, to save ourselves having to put our properties on the market.

BitterAndTwisted

I don't wish to appear completely obtuse but why would they want to swap a 15-year mortgage liability in exchange for a rent one for the rest of their lives, and in doing so enable you to pay your own mortgage? That doesn't make any sense to me whatsoever.

Or is the idea of charging them rent a fantasy?

autaven

Paying rent was suggested by them to help us pay the mortgage, though we wouldn't need it. We are happy for them to stay in our flat rent fee. Or sign it over into their name for their own peice of mind.

G_M

autaven wrote: »

They'd like to do it to enable themselves to be mortgage free. Otherwise they have another 15 years to pay on their mortgage.

Your answer makes no sense. They could sell their property for £87K, be mortgage free, AND have cash in the bank.

The answer is for
* you to buy from them for £87K.
* them to buy from you for £75
* you to take out a mortgage for the shortfall

(assuming they wish to live in your flat)

Or sell both properties on the open market and each find the perfect place to buy.

Unless of course, Inheritance Tax planning is involved.

autaven

G_M wrote: »

Your answer makes no sense. They could sell their property for £87K, be mortgage free, AND have cash in the bank.

But if they did that thats them having nowhere else to live. They still have £60000 left on their mortgage to pay.
They would be moving into our flat. We would essentially be taking on their mortgage, and them living in our flat mortgage free.

BitterAndTwisted

But if you do a property swap it wouldn't be "your" flat any longer but owned outright by your parents with no mortgage. Is the real motive here that you don't want to swap at all but to buy a second property at a £27,000 discount which just happens to be currently owned by your parents?

autaven

It's just a discussion we were having with my parent's today - there isnt a motive. I would like my parents to live mortgage free as me and my partner have been for a year. We would be okay signing it into their name, we would be selling out house anyway. The prices of houses we were looking at were £150000, but they were new builds and nowhere near the size of my parent's. So basically we'd be looking at a mortgage of around the same if we weren't buying my parent's house at all. Whereas surely we'd both be benefitting from this.

Yorkie1

You are missing the point that your parents lose out financially by £27K. If you must do this property 'swap' the least you can do is to be honourable enough to ensure that they don't lose out financially.

fawd1

Yorkie1 wrote: »

You are missing the point that your parents lose out financially by £27K. If you must do this property 'swap' the least you can do is to be honourable enough to ensure that they don't lose out financially.

But they won't lose out on 27k at all will they? If she buys from her parents at 87k then they pay off their mortgage and have 27k left over to attempt to buy a place mortgage free. If she pays her parents £60k she is then planning to sign over her current house to them so they will be living rent and mortgage free in an £80k flat. Otherwise, if she pays 87k to them, AND signs the house over, she is royally screwing herself (although she's pretty much doing that anyway, I appreciate it's to help her parents out!)