Buying Parents House (They still have mortgage outstanding)

ookoro

So my father has been diagnosed with cancer and is slowly getting worse meaning he is able to work less and less. They have a mortgage that still has roughly £80k outstanding.

To help them out I would like to buy their house for the outstanding mortgage so they can use that to pay it off.

Then they would less to pay until I am able to cover the costs. Their mortgage is currently £1600 a month. I'm hoping my buying it would reduce it to circa £500.

Is this possible and is there anything I need to be aware of?

Thanks

Mojisola

ookoro wrote: »

They have a mortgage that still has roughly £80k outstanding.

To help them out I would like to buy their house for the outstanding mortgage so they can use that to pay it off.

Then they would less to pay until I am able to cover the costs. Their mortgage is currently £1600 a month. I'm hoping my buying it would reduce it to circa £500.

If you are going to buy their house for £80k, why would your parents be paying out any money?

ookoro

The aim of my purchasing their house is to reduce their monthly outgoings. So they'd kind of be paying me rent. As I currently privately rent, I can't afford to pay both.

Thanks

Bluebirdman_of_Alcathays

You would be their landlord, and have to pay tax on the rental income you receive. You cannot use the capital repayments of the mortgage as an expense against tax, only the interest component. If you are a higher rate taxpayer, even the interest will be restricted going forward.


As you own a property you do not live in, you will be liable to capital gains tax when you dispose of it.


If you are financing this with a mortgage, I assume you will need a BTL mortgage, and the lender may get funny about renting to family, although that's not really my area.

nubbins

......and sorry to hear about your father

ookoro

nubbins wrote: »

......and sorry to hear about your father

thank you. It's been a few years post diagnosis but you can't help but worry when time will stop being bought and he's getting noticeably aged. This is a post for another forum, but thank you for your kindness

ookoro

Bluebirdman_of_Alcathays wrote: »

You would be their landlord, and have to pay tax on the rental income you receive. You cannot use the capital repayments of the mortgage as an expense against tax, only the interest component. If you are a higher rate taxpayer, even the interest will be restricted going forward.


As you own a property you do not live in, you will be liable to capital gains tax when you dispose of it.


If you are financing this with a mortgage, I assume you will need a BTL mortgage, and the lender may get funny about renting to family, although that's not really my area.

Hi

Thanks for your response.

So I'm guessing I wouldn't be able to finance with a normal mortgage?

Ok is there another way of achieving the same result? I.e. reducing my parent's monthly repayments on the mortgage?

Thanks

teddysmum

There is also the a possible case of deprivation of assets, should either parent need residential care. By selling for just the outstanding mortgage amount they would be giving away a much larger sum. Carewise, they would be treated as though they still had the money, so no LA help.

mrginge

ookoro wrote: »

Hi

Thanks for your response.

So I'm guessing I wouldn't be able to finance with a normal mortgage?

Ok is there another way of achieving the same result? I.e. reducing my parent's monthly repayments on the mortgage?

Thanks

Why don't you just pay their mortgage for them?

AdrianC

ookoro wrote: »

Ok is there another way of achieving the same result? I.e. reducing my parent's monthly repayments on the mortgage?

I cannot see how an £80k mortgage can possibly be costing them £1,600/month. Assuming it's a normal 25 year repayment mortgage, that would be about 24%APR interest.

Even £500/month would be nearly 6%.

getmore4less

AdrianC wrote: »

I cannot see how an £80k mortgage can possibly be costing them £1,600/month. Assuming it's a normal 25 year repayment mortgage, that would be about 24%APR interest.

Even £500/month would be nearly 6%.

because it used to be much bigger and started years ago.