Idea of investing in parents home?

turtleneck

Hi,
My parents have worked hard all their lives but are still struggling despite both being close to 60. Father is self employed and due to health issues had to have six months off work without pay. This means they still have a fair size mortgage (about 30% of the house).
It's a semi detached 3 bedroom house worth 250-300k in a nice area and has a lot of potential to add value. With an extension they could add another 2 bedrooms, en suite, new kitchen/bathroom etc. I think any money spent would increase the value significantly. My father has indicated if he had the money he'd gut the place and install underfloor heating etc. Lots of potential but lack of funds. He will inherit from my gran at some point but I think most of that would go on the mortgage.
I currently have a leasehold flat with decent equity but being in my 30s and single (happy that way) I feel a little tied down having a mortgage. To be honest I'd be happy sharing with a friend or just renting somewhere small myself.
So I thought of an idea, sell my flat, release the equity (about 80k) and give most of this to my parents to do major work on their house and make it somewhere amazing to live. I would keep enough aside to live comfortably for myself (say 10k).
My parents house would eventually pass on to me and my sister so one day in the future I would have a lump sum to buy myself a place outright.
Does this sounds crazy or is it worth considering?

Missko

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Missko

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Mojisola

turtleneck wrote: »

So I thought of an idea, sell my flat, release the equity (about 80k) and give most of this to my parents to do major work on their house and make it somewhere amazing to live.?

If you give them a loan rather than a gift, the money will stay yours rather than become part of their estate.

Missko

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Missko

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Mojisola

Missko wrote: »

Cross post, Mojisola! I got sidetracked!

Great minds! :rotfl:

jackyann

It is good that you are thinking around this.

Remember that if the house is one of your parents' assets, it will be included in assessing paying for any care they may need.

Also, improvements to the house may allow your parents to stay in it for longer, but my not add as much to the value of the home as you think - talk to an estate agent.

You could consider taking a share in your parents' house, drawn up formally.

Although I am not sure if it would work at either a personal, or building / planning level: would you consider making the extension a flat in which you would be comfortable, or that your parents could move into?

If you decide to proceed with any of these ideas, get good legal advice and draw up agreements properly. We sadly hear too many stories on this site of family agreements that do not hold up over the years.

Good luck - and your parents are lucky to have someone so thoughtful in their lives.

xylophone

Have the house properly valued.

Work out the percentage of the value represented by the £80,000.

Lend your parents the money interest free but on the basis that on sale of the property/death of your parents etc, you will receive a return of your capital plus the percentage of the increase in value?

Obviously you and your parents would take legal advice and have a properly drawn up legal agreement- you would check the tax situation on repayment.

penguingirl

Would your parents realistically want to put up with the building work and hassle etc of extending if they don't need the space? Particularly if they have health issues. Most people that age (like my own parents) are thinking about downsizing e.g. from 5 bed homes to 3 beds, not the other way round! I know my parents certainly struggle to keep up with housework etc now they have an empty nest.