Paying off my parents mortgage in secret for Christmas?

patanne

Please also remember everyone that this is an NRAM mortgage - some of which are at what most would now consider eye-watering interest rates with no or very difficult escape. OP have you actually discussed mortgage freedom with your parents, it may help you gauge their attitude to what you want to do. Certainly if the mortgage is weighing heavily on them then it would be a good idea. But if they are content with it, well it may not be such a good idea.

You may find that an up-to-date car with all the extras (with my personal favorite heated seats for example) may be something that they would never do for themselves but would really appreciate.

I do think you need the conversation so that you can get some idea of how much THEY want the mortgage freedom. I also think it is really lovely of you to want to do this for them. Good luck!

ETA An updated car with several years guarantee & free servicing may free up some of their money to overpay the mortgage - a suggestion that you could make. They would also get much better bragging rights! This could also be accompanied by a partial mortgage payment. But it does all depend on their attitude to it - have the conversation!!

Arklight

Aren't there a lot of tax implications with giving people lump sums? You might have to give them more than £40k for them to receive £40k.

patanne

There would only be tax implications if the donor was to die within 7 years and that would only impact the donors estate not the recipient.

Keep_pedalling

patanne wrote: »

There would only be tax implications if the donor was to die within 7 years and that would only impact the donors estate not the recipient.

There is another potential tax implication. If this gift pushes the OPs parents estate into inheritance tax territory then his gift could be taxed at 40% on their death.

I also think rather than surprising their parents, they should actually talk it though with them sometimes such acts of generosity are not received as one might expect.

booksurr

Keep_pedalling wrote: »

There is another potential tax implication. If this gift pushes the OPs parents estate into inheritance tax territory then his gift could be taxed at 40% on their death.

I also think rather than surprising their parents, they should actually talk it though with them sometimes such acts of generosity are not received as one might expect.

rather a contrived point

the circumstances you describe mean the parents have died before they themselves had paid off their own mortgage. As such the fact the OP as (presumably) a beneficiary of their will gets back less money that he paid into the mortgage because some of it has gone on IHT is rather stretching a point given we know nothing about the value of the parent's estate.

what we do know is that OP intends that his parents become mortgage free much sooner than they themselves were expecting. Such a magnanimous gesture far outweighs your obsession with minimising the remote possibility the OP getting less inheritance because some went on IHT

missprice

Alcur, if it all goes wrong and you feel like getting new parents, I am offering to adopt you.

But really if my kids did this I would be over the moon, and much relieved that even my tiny mortgage was no more.

I can't see any way of doing it secretly either but still a lovely gift.

hcb42

Missprice has beaten me to it

lulalola

Agree with those saying it's a lovely thought but be careful. My parents would be touched if I wanted to do this, but would not want to take my money and would be upset if I forced it on them. We didn't have much growing up, and now that they are in a comfortable position, and I have managed to set up a comfortable life for myself also, they want me to spend my money on things and experiences that I couldn't have when I was young. They never let me pay for anything.

YOu're obviously a very kind and thoughtful person though OP. I hope it goes well whatever you decide to do.

chambta

patanne wrote: »

Please also remember everyone that this is an NRAM mortgage - some of which are at what most would now consider eye-watering interest rates with no or very difficult escape. OP have you actually discussed mortgage freedom with your parents, it may help you gauge their attitude to what you want to do. Certainly if the mortgage is weighing heavily on them then it would be a good idea. But if they are content with it, well it may not be such a good idea.

You may find that an up-to-date car with all the extras (with my personal favorite heated seats for example) may be something that they would never do for themselves but would really appreciate.

I do think you need the conversation so that you can get some idea of how much THEY want the mortgage freedom. I also think it is really lovely of you to want to do this for them. Good luck!

ETA An updated car with several years guarantee & free servicing may free up some of their money to overpay the mortgage - a suggestion that you could make. They would also get much better bragging rights! This could also be accompanied by a partial mortgage payment. But it does all depend on their attitude to it - have the conversation!!

My understanding is that ALL mortgages with this organisation are available to repay without penalty. Do you know different?

patanne

I didn't mean that paying it off would be difficult just that a lot of people with NRAM mortgages are having difficulty re-mortgaging to get a better (lower rate) product. So they could well be on what is a very high rate for now with no means of escape to a cheaper product.