Mum and Dad’s house & building a granny flat

Ellalou

badger09 said:

What do your parents think about this idea?
Do they want to downsize from a large semi to a converted garage? (I know I wouldn’t) 

As you all live on the same street, there is no obvious benefit, in terms of them possibly needing more support from you in the future. 

Have you considered buying each other’s houses, effectively doing a house swap? Obviously you’d have to do this legally, but it could solve their problem of the looming £150k mortgage repayment 

They were quite excited by the idea. Obviously lots to consider..

shining_this_way

It sounds lovely but I know a family who did something similar and it didn't go well in their case.

Elderly couple sold up and moved in with their daughter and her husband. They used a lot of the money from the sale of their house to build an annex and make a few other modifications/improvements to the daughter's house. This created bad feeling with the other siblings who felt they were missing out on future inheritance - to them, the parents were basically investing in the one daughter's house. They generally managed to get passed this at least knowing the parents would be cared for, but the relationship was harmed. About five years after moving in, the daughter died (sudden illness, in her 50s). The parents need fairly significant care now and they're essentially trapped living with their son-in-law and vice versa. They're all lovely people but they wouldn't choose to live together in current circumstances. The parents have spent a lot of money on a house that now belongs solely to their son-in-law and don't have many options. 

Maybe if you all live together the house could be jointly owned by the four of you, proportional to how much your parents 'invest' in creating the annex? 

thegreenone

Once the extension is complete, how much will the house be worth at market value and can you afford that?

sheramber

What price do you estimate you will sell for?

What will be the market value of your parents' house when you want to buy?

Presumably , it will be worth a lot more than your house.

How will you finance buying your parents' house to have £100k equity left after buying it?

Ellalou

thegreenone said:

Once the extension is complete, how much will the house be worth at market value and can you afford that?

I would estimate about 350k, a house with a similar extension sold for that on our street about 6 months ago. 

Yes, myself and my husband have joint income of around 96k per year. No other debt apart from mortgage. 

Ellalou

sheramber said:

What price do you estimate you will sell for?

What will be the market value of your parents' house when you want to buy?

Presumably , it will be worth a lot more than your house.

How will you finance buying your parents' house to have £100k equity left after buying it?

Our house market value is around 290k just now. 

We would sell our house and use whatever equity we make to put down a deposit on my mum and dad’s house and finance an extension. We have approx £180k outstanding on our mortgage - will obviously be less in a couple of years as it’s a repayment mortgage. 

Ellalou

thegreenone said:

Once the extension is complete, how much will the house be worth at market value and can you afford that?

Around 350k would be my estimate. Yes, we would put quite a large deposit down. 

We have joint income of approx £96k per year. We could afford it and have no other debt. 

Ellalou

shining_this_way said:

It sounds lovely but I know a family who did something similar and it didn't go well in their case.

Elderly couple sold up and moved in with their daughter and her husband. They used a lot of the money from the sale of their house to build an annex and make a few other modifications/improvements to the daughter's house. This created bad feeling with the other siblings who felt they were missing out on future inheritance - to them, the parents were basically investing in the one daughter's house. They generally managed to get passed this at least knowing the parents would be cared for, but the relationship was harmed. About five years after moving in, the daughter died (sudden illness, in her 50s). The parents need fairly significant care now and they're essentially trapped living with their son-in-law and vice versa. They're all lovely people but they wouldn't choose to live together in current circumstances. The parents have spent a lot of money on a house that now belongs solely to their son-in-law and don't have many options. 

Maybe if you all live together the house could be jointly owned by the four of you, proportional to how much your parents 'invest' in creating the annex? 

That all sounds like a nightmare, really unfortunate circumstances to find themselves in! 

My parents have to sell the house regardless, that’s why we are talking about buying it at market value so they get the equity money. We wouldn’t be looking to buy below market value and then they lose out on the money they would make had they put it on the market. They would be paying for building the annex for them to live in with their savings, this in turn would raise the market value of the house so they would get some, if not all of it back when they sell to us! 

It gives them somewhere to live and means they don’t have a mortgage - this could be for the next 15/20 years. 

Ellalou

shining_this_way said:

It sounds lovely but I know a family who did something similar and it didn't go well in their case.

Elderly couple sold up and moved in with their daughter and her husband. They used a lot of the money from the sale of their house to build an annex and make a few other modifications/improvements to the daughter's house. This created bad feeling with the other siblings who felt they were missing out on future inheritance - to them, the parents were basically investing in the one daughter's house. They generally managed to get passed this at least knowing the parents would be cared for, but the relationship was harmed. About five years after moving in, the daughter died (sudden illness, in her 50s). The parents need fairly significant care now and they're essentially trapped living with their son-in-law and vice versa. They're all lovely people but they wouldn't choose to live together in current circumstances. The parents have spent a lot of money on a house that now belongs solely to their son-in-law and don't have many options. 

Maybe if you all live together the house could be jointly owned by the four of you, proportional to how much your parents 'invest' in creating the annex? 

I think by having the work done to the house over the next 2 years, then selling at market
value to us it would take away any bad feeling with family members andy parents rightly gain all of the equity in the house as they have invested the money into it. Once the house is sold to us we would be paying for any further modifications with our own money. And they are able to have their retirement pot with the money they earned on the house sale.

They either do this or they sell the house and use all of the equity money and probably some of their savings to downsize. They would not get another mortgage due to age and retirement income / affordability so these are the only 2 options they have!