# Parents can't pay their mortgage. Can I buy their home as a buy to let?



## Sailorboi (25 Feb 2021)

Hi All,

I have a bit of a strange query and wasn't sure of the exact thread to post it to so have posted here, please let me know if I have posted to the wrong thread.

Basically my parents have a warehousing payment to make on their mortgage which is with a vulture fund in a few years. They can afford to meet the current monthly repayments as it is but don't have any savings to be able to pay the balance when it is due.

I have my own mortgage with my wife and thought about a remortgaging our home to assist but would prefer to avoid this if possible. The balance is >60k and any personal loans are all to short and would need something long term between 10-15 years. If a personal loan was the option my parents would continue to pay the normal rate and I would pay the balance with the loan being in my name.

My bizarre thought was to see if I could acquire a BTL mortgage from a bank to clear the balance then to have the home gifted to me under gift tax. As the current property value is < then the threshold between €310-320k (last valued two years ago). I am an only child as well.

By acquiring a BTL my parents would then pay me rent every month. I am no expert in any of these fields and doubt it is viable but thought I would ask here to get peoples thoughts.

Appreciate any feedback.


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## misemoi (26 Feb 2021)

You will need a 30% deposit plus cash for fees. If you have this available why not lend it to your parents instead?


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## Brendan Burgess (26 Feb 2021)

Can  you give some hard information as there may be other solutions.

Your parents
1) Value of parent's home.
2) Is it a warehouse on a split mortgage?
3) Which original lender and which fund owns it now?
4) How much is the warehoused element?
5) Date the warehoused element becomes payable?
6) What is the active balance on the mortgage?
7) What is the interest rate and what repayment are they making?
8) Age of parents
9) Income of parents.
10) What monthly repayments can they afford now and in the long-term?

Yourself
1) Value of your home
2) Mortgage due on your home
3) How much other assets do you have?
4) Do you have other loans?
5) Your income
6) Your age
7) Are you living in your forever home or might you want to trade up in the future?


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## Sailorboi (5 Mar 2021)

Brendan Burgess said:


> Can  you give some hard information as there may be other solutions.
> 
> Your parents
> 1) Value of parent's home.
> ...



Please see details below I don't have all of the information but hopefully this will assist.

Thanks

Your parents
1) Value of parent's home. *€320k*
2) Is it a warehouse on a split mortgage? *Not sure*
3) Which original lender and which fund owns it now? *PTSB but account is maintained by Pepper. Don’t know name of Peppers client*
4) How much is the warehoused element? *€56k*
5) Date the warehoused element becomes payable? *Nov-24*
6) What is the active balance on the mortgage? *€72k ish*
7) What is the interest rate and what repayment are they making? *Unsure of rate around €540 pm*
8) Age of parents *65 and 63*
9) Income of parents. *PUP and Disability Pension (very little)*
10) What monthly repayments can they afford now and in the long-term? *Would need to discuss*

Yourself
1) Value of your home *€330k*
2) Mortgage due on your home *€260k*
3) How much other assets do you have? *Savings €15k*
4) Do you have other loans? *€6k*
5) Your income *€55k*
6) Your age *30*
7) Are you living in your forever home or might you want to trade up in the future? *Plan would be to develop forever home on parents site in the future after inheritance tax

My parents is an old house that requires work but where it is located makes it a prime location increase the overall value.*


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## NoRegretsCoyote (6 Mar 2021)

Sailorboi said:


> 8) Age of parents *65 and 63*



The active part is (just about) affordable on current income and state pension in future. You are right that the warehoused component is the problem. Do they have any pension lump sum they could access in the coming years? This could help with paying down the warehoused part. 

With your income and existing mortgage there is no way a bank will give you another mortgage to buy out your parents. You could maybe save very aggressively between now and November 2024 to lend them the €56k to pay off the warehoused part. This would be a struggle on your current income and mortgage though. You're at the age where people have kids too. 

There is an easy solution. They sell the house in 2024 and pay off the mortgages at that stage. A sales price of €320k less mortgage and selling fees of maybe €130k leaves them with €190k.

It's not much (particularly in Dublin) but plenty of retired couples with no dependents live in houses/apartments worth approx €200k, and they would have no stress of a mortgage anymore.


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## Gordon Gekko (6 Mar 2021)

It sounds like a potential case for Seniors Money.


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## Brendan Burgess (6 Mar 2021)

1) While you are right to be thinking in advance about this, you should not be doing any very hard planning.  The issue does not have to be resolved for 3 1/2 years and other products might be on the market by then. 

For example, the loan could be sold again to a fund which would be delighted to have an interest only loan of €56k @3% on a house worth €320k. 

2) If you have savings of €15k and a loan of €6k, you should be clearing that loan assuming you are being charged interest on it. 

3) Here are some of the options available in 3 1/2 years 
A) You ask Pepper nicely to do a deal and if they refuse, you tell Pepper your parents are not going anywhere, but will continue to pay €540 per month and thus pay down the warehouse.  It would take them at least 4 years to get an order for possession. 
B) Your financial situation has improved and you can reduce the shortfall to say €40k.  You get a credit union loan for this and you and your parents repay it as quickly as possible.  
C) Your parents take out a Life Loan from Seniors Money. They might give them about €90k depending on the value of the house. They charge interest of about €5k a year which you can pay each year, or they will roll it up. 
D) Your parents sell a site on the land and they would then be mortgage-free 

There is not much you can do so far in advance.  Maybe bear it in mind that you might help them so don't go putting your savings in some 10 year product you can't access.  Make sure that you and your parents have a Credit Union Account. 

Consider applying now for planning permission for the site.  Selling a site with planning permission would presumably make it far more valuable. 

Brendan


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## Bronte (6 Mar 2021)

Questions

How much to build
Is the ‘site’ not part of the mortgaged house
Does your valuation of parents home include your site
How much is the site worth


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## torblednam (6 Mar 2021)

Where are you getting this "site" from? The only reference the OP made to the word site was:


Sailorboi said:


> Are you living in your forever home or might you want to trade up in the future? *Plan would be to develop forever home on parents site in the future after inheritance tax
> 
> My parents is an old house that requires work but where it is located makes it a prime location increase the overall value.*



Maybe it's just me, but I don't read this as suggesting there's potential for a second house on the existing site; the OP is saying that after he inherits the whole lot he could potentially develop (ie knock and rebuild, or extend) the pre-existing house... 

Hopefully the OP comes back to clarify soon, but in the meantime I wouldn't be assuming there's a site here, it reads to me like it's just a house.


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## huskerdu (6 Mar 2021)

This is a key point though. 

We have all assumed that the point was to secure the home for the parents to live in . If this is the case, the OP will (hopefully) not inherit for another 20/25 years .


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## Brendan Burgess (6 Mar 2021)

Hello Sailor

You will need to clarify. 

1) Is there a site which can be separated from your parents' home?  
2) If there is a mortgage on it, the lender would not allow them to give it to you without discharging the mortgage first. 
3) If it's your plan to take over your parents' home in 20 years as your forever home does that mean that you are happy where you are for the next 20 years? 
4) If so, then you could aggressively save to clear as much as the shortfall when it comes due in 3 1/2 years.

Brendan


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## Sailorboi (8 Mar 2021)

Hi All,

I appreciate your feedback on this please see details below.

1) Is there a site which can be separated from your parents' home?
No, the plan would be to knock down the current house and rebuild.

3) If it's your plan to take over your parents' home in 20 years as your forever home does that mean that you are happy where you are for the next 20 years?

That depends yes I am happy where I currently am but within the next 10 years I would like to see what options are available.

4) If so, then you could aggressively save to clear as much as the shortfall when it comes due in 3 1/2 years.

It seems to me that a viable option is to aggressively save over the next 3.5 years and draw down a personal loan to clear the balance. It will be a bit of pain over the next 10 years but would do anything to help them keep their home.


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