How do I best help my mum?

IrnBru_4

Hi MoneySavers

My mum has historically been terrible at managing money - my sister now keeps her distance to avoid giving her handouts. I'm more sympathetic but am at the end of my tether. She has gone from owning her house outright to owing £40K on a mortgage plus £15K of credit card debt. (She shouldn't take all the blame for this, 2 years ago she had a stroke and my stepdad remortgaged twice, and built up the c/c debt over the 9 months she was in the hospital).

She has also borrowed £5K from me in £1K increments in an attempt to firefight. Since the stroke she is on benefits and the mortgage is £375 of their total £425 income (stepdad is full-time carer). She has also negotiated paying £20 each to the two credit cards, so she is left with £10 month to live on. The house has been valued at £80K so my advice was to sell, pay off her debts and move into a council house before the house gets repossessed.

She really doesn't want to move though and I have enough savings to pay off the mortgage in full. However, I'm nervous about doing this, as the house is co-owned by my stepdad (who is only 8 years older than me) and unless I somehow get the house transferred to my name or my partner's, he could theoretically remortgage it again. I could raise around £60K to pay off the credit cards and the mortgage and simply just buy the house from her at a reduced rate (she is agreeable to this) but I'm not sure that makes financial sense either. I don't want to appear tough but I'm forever bailing them out and if I do this I would have no savings to fall back on and wouldn't even get the interest (I doubt we'd see any rent). Then there are the tax issues with it not being my PPR which I think means I'll get hit with CGT when it comes to sell (in around 20 years time).

Do any of you nice people have any experience of this or any advice?

Thanks in advance.

PasturesNew

This sounds like a job for the Benefits Board and Debt Free Wannabee Board.

But you'd need to be able to give a full SOA. A full list of all their income/outgoings. And all financial ins and outs. So you can get the best help.

moneysavinmonkey

a plan of selling the house and moving into a council house doesn't sound realistic or workable. There is a chronic shortage of council housing and people who already have a home will be waiting on the list for years. I doubt the council would be able to help your mum until she was actually homeless, and even then maybe not if she had any cash left from the sale of her home. Not a practical plan really?? although perhaps someone with experience of this will prove me wrong.

What has the 40k + 15k gone on?? - that is a substantial amount of money to just 'disappear' has anything been bought that can be sold in order to pay down the debts - e.g. a car etc.

Seems like your mum is in an impossible situation due to the mortgage taken out by your step-dad. It doesn't sound to me like you mum is bad with money, just bad with men!

I would be very wary of taking on your mother's house for her as if she is already owes your money you are just going to be taking more of a hit. She needs to take some personal responsibility and sort things out herself as best she can- help her to help herself.

TheChicken

Id buy the house outright as an investment, payback your mum what you owe her and if you feel generous let your mum stay in the house either free or paying you rent, she can then pay off her bills and possibly claim housing benefits which you would recieve.

HTH

Ch!ck

clutton_2

""she can then pay off her bills and possibly claim housing benefits which you would recieve."" - local authorities definitely frown on this type of transaction - they rarely pay HB to a family landlord

Please dont be offended as i know this is going to sound very tough - but its also known as tough love - but sooner or later your mum will have to face up to her own financial situation - by your continuing to prop her up with loans (which you both now she will never repay) all you are doing is putting off the evil day when she is repossessed.

As long as she is in this grey area of uncertainty, of "when will it all end", the whole family is going to be stressed and worried - i suggest SHE goes to CAB and asks to see a debt counsellor - they are there to help her make tough choices - for sure go with her for moral support, but, this is her problem - you cannot continue to pretend its yours.

good luck

IrnBru_4

Thanks everyone for their replies.

I don't know where the money went - that is what I find most appalling of all they've got absolutely nothing to show for it. Which is why I've put my foot down at £5K and where the idea of me buying the house came from (at least she wouldn't be able to borrow against it then and I would have an asset instead of dripfeeding her money all the time). However I'm nervous about ploughing all my savings into a house I don't really want, with no return, and no chance of selling it again for ages (stepdad is only 45).

*Louise*

IrnBru wrote: »

She really doesn't want to move though and I have enough savings to pay off the mortgage in full. However, I'm nervous about doing this, as the house is co-owned by my stepdad (who is only 8 years older than me) and unless I somehow get the house transferred to my name or my partner's, he could theoretically remortgage it again. I could raise around £60K to pay off the credit cards and the mortgage and simply just buy the house from her at a reduced rate (she is agreeable to this)

If that's what you're happy to spend your savings on, then your mum is lucky to have you to bail her out.

However - if you do buy it, make sure it is a legal sale, so there is no chance of your stepdad remortgaging it again (what a creep he sounds btw) And make sure you charge them rent - even if it is less than what they would pay if they rented properly,(I would start by calculating what interest you would be losing on 60k) also - have a proper tenancy agreement drawn up. It sounds like it's high time they started being responsible and paying what they owe.

Her chances of getting a council house are slim. If she sells then she is making herself voluntarily homeless, and she will most probably be a low priority.

Stevie1

IrnBru, if your mum is unwell she has a strong case for a council property regardless if she owns her own home. I know this for sure as a family member did the same thing about 2 years ago.

Get in touch with the local authority to enquire before you turn your back on that solution.

clutton_2

if you buy and get a BTL mortgage - one of the terms and condition is that you do not let to family - altho i am sure some folks do.