I need a mortgage to renovate my mother's house

K

Kerry78@

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Hi all.

My partner and myself - with my elderly mother's agreement - are planning to renovate her house inside, build a granny flat extension and a garage and move in with her, as she is living on her own and will need help in the future.

My mum has set up her will in such way that myself and my sister are both inheriting half of the property if she passes.

I am now trying to figure out what we need to do in order to tackle this whole thing from a financial perspective, will we be able to apply for a regular mortgage to cover the 50% of the current property value to pay my sister out, do the renovations and extension, or will we have to apply for a probate /trust loan to do all this, or as a third option, will we have to apply for both a mortgage to do work required and a probate / trust loan then as well to cover the amount needed to pay out half to my sister?

All very confusing..

Thank you so much for any advice, tips etc - much appreciated!!
 
It would be simpler to buy the house from your parent.

Your parent can pay for the renovations & then invest the remaining cash as she chooses.
 
Thank you. Yes, I had suggested it, but she would like to keep on to at least a part of it as long as she lives there, so that isn't an option, unfortunately.
 
Your mother wants to retain ownership of her house
She wants you to pay to have the house renovated, build an extension and move in.
On her death she plans to leave the house to you and your sibling.
On her death you plan to take ownership of the full house.
You don’t have the cash so you needs loans for all of this.

Say the house is worth €300K and you will need to spend €100K for the upgrades and extension.
You spend the €100K, which is essentially a gift to your mother.
She dies and leaves the house to you both, essentially €200K each.
You then spend another €200 K buying your sibling out.

I can’t see any regular bank lending you the €300k you need for this. And I know nothing about trust/probate loans. If your mum is elderly, say 75, you are probably 50 and would you be able to pay back a €300 K loan over 15 years, which would take you to 65 and when you stop working. You will need to do the calculations yourself. And maybe talk to brokers etc., would you have 10-20 % saved already? Because it is not a mortgage the interest rate is higher too. And even if you wanted to take out a €100 K loan first, who would lend you money to refurbish a house you do not own?


It would be a lot easier if your mother sold the house to you for €300K, she spent €100k on the renovations and gave the €200K to your sibling. Same outcome, much easier to do. But there are pitfalls with this approach also. What if this all happened in 2024 and your mum needed nursing home care in 2026. Her assets would be considered to be the €200K she gave your sibling plus a value of the right to live in the house. Or she might be assessed as having assets of €300K so this could be a significant risky move for her and her estate.

And overall I wonder if you would resent your mother and sibling if you end up with a €300K loan and your sibling ends up with €200K cash.
 
Your mother does not want to sell the house to you now, and she is right. You and your mother could fall out. You and your sister could fall out. You and your partner could fall out. Your mother and your partner could fall out.

There are so many pitfalls here that your mother should absolutely not sell the house to you and your partner now.

Brendan
 
How much will the renovations cost?
How much do you and your partner have in cash?
What age is your mother?
How much is the house worth?

The best approach to all this is for you and your partner to lend your mother whatever you have to do the work.

Assuming that is not enough, then your mother should take out a loan for the balance from Spry Finance

Equity Release Calculator - Spry Finance

Calculate the maximum equity release from a fixed interest rate lifetime mortgage loan with the Spry Finance Equity Release Calculator
www.spryfinance.ie www.spryfinance.ie

You and your partner would then lend your mother money to repay this loan.

That will solve the first problem of getting the work done.
 
Now assume that something goes wrong. You and your mother fall out. She needs to move into a nursing home but refuses to go. You can't care for her on your own.

Then you move out of the house but your mother still owes you the money which would be repaid on her death from the sale of the house.

It's essential that this is a loan from you to your mother so that if you fall out and she cuts you out of the will, you get your money back.

Brendan
 
Now assume that everything goes well and you and your mother and your partner all get on well until your mother dies.

Hopefully, you will have paid off your mother's Spry loan by then and will have built up some cash savings.

Let's say the house is worth €600k
Your mother owes you €100k
Your mother's estate is worth €500k
Your sister needs to be paid €250k

So you will then need a mortgage of €250k less any cash savings you have.

Would your sister be in a position to "lend" you the money if you can't get a mortgage? In other words, you buy out her share of the house for €250k but pay her off over time.

Brendan
 
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