Please help - parents

J123321

Hi,


My parents are in financial difficulty. they were £8,500 behind on mortgage payments. I have now cleared the arrears.


there house is worth approx 130K with around 25K left on the mortgage. They have started receiving benefits but the benefits office wont pay the mortgage which is fair enough.


They have asked if I can buy the house from them. I guess my options are as follows.


1 - Buy it from them with them effectively gifting me the difference from market value 130K to outstanding 25K
2 - Pay off the mortgage and get them to sign the house over to me and them continue living there.


Is there any implications of this? In an ideal world I would charge them rent that is paid by the benefits office to pay for the loan I would take out to pay for the rest of the house but im sure there is implications on this.


They don't want to sell as they have lived there for years.

BrassicWoman

do you own your own home or will this deprive you of first time buyer status?


can anyone afford to maintain and repair the home?

J123321

Hi,


Thanks for your reply. I own my home already. I could afford to help out a little bit may struggle if there was to be anything major...……

hazyjo

How come they can no longer afford the mortgage? What else are they behind on? (Mortgage payments are priority payments, so I'm guessing they are in debt to every supplier, etc too?)

Are you sure they're not entitled to housing benefit? Sometimes, if reason, they will pay the mortgage if cheaper than them paying rent for them elsewhere. Can't imagine £26k would cost much per month. Mine's £50k and only £300 a month.

Could they take in a lodger?

Would you need a mortgage to buy the house (you mention 'loan')? Would be a BTL. Do you have 25% deposit available? Very unlikely they'll give you a mortgage with your parents as tenants. Especially when they're in so much debt. Also, they won't get housing benefit if you own the property they rent (search 'contrived tenancy').

Really sorry to be so blunt, but just because they have lived there for years is not an excuse for them to stay. I would suggest selling and downsizing/moving to a cheaper area. ASAP! The longer they leave this, they are VERY likely to have the property repossessed and end up with zip.

Robin9

Ho old are they ?Both receiving pension ?

silvercar

SMI - support for mortgage interest - should be a benefit they could claim, though I understand it is a loan now rather than a payment outright.

J123321

Hi, thanks for your reply.

They are both under the state pention age and don't have a private pension.

My father has always worked as a fisherman but can't due to health. Mum has never worked but been a housewife. They have never claimed benefits I tip now.

They have had broadband etc cut off. But the council is now paying heating and CT etc but not mortgage.

They wouldn't take on a lodger, or consider moving. I know it may be stubborn but they were days away from being evicted before I cleared the arrears.

I would most likely get a loan to pay the 25k off and then sign the house into my name.

I. Have read up on contrived tenancy but I think I would have a fair argument as I would be using the HB money to pay off the loan. Not sure though so valid point that needs looking into further.

babyblade41

Forget the rental situation .. my advice would be to not walk away but point them in the direction of debt councillors ..maybe the debt forum would supply more beneficial answers

Don't put yourself in financial risk, but you can still help

Slithery

J123321 wrote: »

Have read up on contrived tenancy but I think I would have a fair argument as I would be using the HB money to pay off the loan. Not sure though so valid point that needs looking into further.

If you aren't going to evict them when they fall behind on their rent then it's a contrived tenancy.

Also if you're even contemplating becoming a landlord make sure that you read the following link, and all of the links that it contains before making any decisions. It's nowhere as easy as you may think.
Tenancies in Eng/Wales: Guides for landlords and tenants

The fact that you want to let to family doesn't change any of your legal obligations as a landlord, unless of course it's a contrived tenancy...

Also, don't forget your CGT liability. The longer that you own this second property the more tax you'll have to pay when you eventually sell.

Socajam

How much is the mortgage per month?
Instead of paying the mortgage off as it such a small amount, I would say pay it monthly.
Or, if you are going to pay the mortgage off, ask them to sell it to you for the 25,000.00.
Not sure how you could go about getting them to pay rent, that's something you will have to look into.
Do you have siblings that will be affected if they were to sell to you?
For such a low mortgage, I would not let the house be repossessed.

Annisele

Is your Mum physically able to work? I know you say she hasn't up to now - but if your parents can't afford to pay for their living expenses, she may have to.