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Buying parents house for them to continue living in
bazzabear
Posts: 20 Forumite
Hi All
My parents, in their 70's, have an interest only mortgage running out on their house next year, which will leave them needing to pay £60k to pay the capital. The house is probably worth £200k. Maybe a little more.
They haven't planned for this properly so have no concrete plan for paying it off.
I could just about afford to buy the house from them for the £60k, leaving them with no debt, but is this at all workable? I assume that buying it for much less than value, from a family member, has issues? Will I be seen as avoiding stamp duty or inheritance tax?
Alternatively, what percentage value do equity release companies offer? The ones that buy the house and let you continue to live there? Are they likely to get more than £60k that way? I'd rather them sell to someone else if they get more money that way.
My parents, in their 70's, have an interest only mortgage running out on their house next year, which will leave them needing to pay £60k to pay the capital. The house is probably worth £200k. Maybe a little more.
They haven't planned for this properly so have no concrete plan for paying it off.
I could just about afford to buy the house from them for the £60k, leaving them with no debt, but is this at all workable? I assume that buying it for much less than value, from a family member, has issues? Will I be seen as avoiding stamp duty or inheritance tax?
Alternatively, what percentage value do equity release companies offer? The ones that buy the house and let you continue to live there? Are they likely to get more than £60k that way? I'd rather them sell to someone else if they get more money that way.
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Comments
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I wouldn't get involved.
Why would they sell to you for £60k? The house is worth £200k. That doesn't make sense.
Your parents could just sell up properly, pay off their debt and keep the £140k.
They could then either buy somewhere for £140k or use the £140k to rent a retirement home and enjoy their life.
Keep your finances separate from theirs. Otherwise it will only lead to problems if one of them needs care.Selling off the UK's gold reserves at USD 276 per ounce was a really good idea, which I will not citicise in any way.0 -
Because they don't want to leave the house.0
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Why not loan them the money?0
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Because they have no way to repay it.0
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You just say they are in their 70's - early 70s will be rather different to late 70's for equity release. I would guess that they should get a bit more than £60K but not a lot. See https://www.aviva.co.uk/retirement/already-retired/equity-release. The downside for any people hoping for an inheritance is that the ER would probably result in most, if not all, of the value house being taken by the ER company when your parents die.
As Computer Beginner suggests, dont get your finances mixed up with theirs. Whatever you and they do should be done in a clear, simple, business-like way. No "clever" schemes! Anything that involves you should be tested against all the scenarios you can think of - eg what happens if you die first.0 -
Because they have no way to repay it.
A loan, with interest if you want, could be covered by a charge on the house to be repaid when the house is eventually sold. If you wanted to do this I think you should use a solicitor to ensure that all bases are covered - eg if you die first and your beneficiaries want their £60K back.0 -
^
What Linton said.0 -
If you give them the 60K to pay off the mortgage, put a charge on the property for 3/10.
This means that if they go in a home then your monies are covered and if they don't go into a home then when they die you will atomically have 3/10 of the property. By then hopefully it should have gone up in value so subsequently has your 60K.
Covers yourself against any siblings etcYear 2019 (1,700/£17000mortgage repayment)Overall mortgage (71,400/165568) (44
.1%) (42/100) payments made. Total paid 2019 year £1,700
Total paid 2017 year £15,300Total paid 2018 year £13,6000 -
Because they have no way to repay it.
They can repay you from the interest they won't be paying on the loan. And when they die you'll get the remainder back. Document it so that if ultimately the house needs to be sold for care you'll get your £60k back. Indeed it would be better if they didn't pay it back.
If that's not acceptable to you (since you seem to want to rip them off by buying their £200k house for £60k) then they can perhaps do equity release to pay off the mortage which will result in completely wiping out any inheritance you might get. So from a completely selfish POV you'd be better off doing DIY equity release by loaning the money. By a substantial amount of money. Likely a hundred £k or more.0 -
A loan, with interest if you want, could be covered by a charge on the house to be repaid when the house is eventually sold. If you wanted to do this I think you should use a solicitor to ensure that all bases are covered - eg if you die first and your beneficiaries want their £60K back.
I would also ask the solicitor what the situation would be regarding LA care home fees assessment in this situation. Because, effectively the OP is becoming a mortgage lender. Would this be seen as contrived / deprivation of assets?Selling off the UK's gold reserves at USD 276 per ounce was a really good idea, which I will not citicise in any way.0
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