Kids buying property from parents

This is messy. Parents own 2 properties A and B. There is no mortgage on property A. Property B was meant to be a short term buy but it was a new build and is now unsellable due to structural problems (this could take 10 yrs to be sorted out).
There is a mortgage on property B (it is currently being rented ) and the repayments are very high as the term was 10 yrs. They cannot afford the payments so have put property A up for sale to pay it off.
Restructuring the term on the mortgage is not an option due to their age.
What we want to know is can the 4 kids buy property A ? Can we set up a property company and buy it as a company, then rent it out ? 2 of us would be FTBs so should they go for it ? These 2 are not in a great financial position but are in steady employment. Our parents can provide the downpayment.
Sorry if this is garbled.
All advice appreciated

I dont think any bank will give you a mortgage if it has structural problems

mortgage is to buy property A. Property B is the one that is structurally unsound.

Where are your parents living?

Are these both investment properties?

Was the house not covered by the HomeBond scheme? Does this not help?

Have you spoken to the bank about Mortgage B? Don't assume that they won't restructure it.

Don't set up a company. It makes no sense. If you have to buy it between 4 of you do so as joint owners. You will lose your first time buyer status, but you would just have to accept that.

Could you not buy part or all of Property B?

If two of you own properties already, is there any scope for remortgaging those and using the proceeds to pay down Mortgage B?

Brendan

beware of buying properties between family members... know many when they get married want out adding to turmoil and falling out of them... which is not worth it.. Be sure and discuss all options and dont force anyone into a decision

Brendan Burgess said:

Where are your parents living?

Are these both investment properties?

Was the house not covered by the HomeBond scheme? Does this not help?

Have you spoken to the bank about Mortgage B? Don't assume that they won't restructure it.

Don't set up a company. It makes no sense. If you have to buy it between 4 of you do so as joint owners. You will lose your first time buyer status, but you would just have to accept that.

Could you not buy part or all of Property B?

If two of you own properties already, is there any scope for remortgaging those and using the proceeds to pay down Mortgage B?

Brendan

Click to expand...

They are in Dublin.

property A is their home, property B was bought when they moved for job commitments (property A was rented). They are back in property A now and renting property B.

Homebond is involved, I dont know the full details, the builder has disappeared, this is going to take years to sort out.

bank will not restructure mortgage for parents. Assuming they would not give anyone a mortgage for property B due to problems. 2 homeowners but only 1 in this country and in negative equity.

OK - this is difficult.

I am assuming that your parents have asked the bank and they have refused?

I don't think that the children should risk their own financial future by getting involved here, unless they can afford to.

Is the mortgage a tracker mortgage?

Does the rent cover the interest?

if it's on a standard variable rate, I don't see why the bank would refuse to reschedule. If your parents pay the entire rent over to the bank and if this covers the interest, then I think that the bank won't take any further action.

What can the bank do? They can get a repossession order and sell the house but that will achieve nothing for them.

You could ask the bank to restructure the loan to interest only and add House A to the security. That should keep the bank happy.

if it's a tracker mortgage, it will be a bit more difficult. You may have to switch to a more expensive SVR mortgage.

Brendan

If property B was a "home" when purchased then an insurance policy from Homebond should cover any defects. Is there a solicitor involved. Did the bank request that a survey be carried out on property B?

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I think that you may be over-complicating things.

The problem is with House B. Your Mum and Dad can no longer afford the repayments and the house can't be sold immediately due to structural problems.

I suggest that your parents figure out what they can afford to pay in monthly repayments on top of the rent. The four of you can also get together and figure out what if anything you could chip in. When you have that figure your parents should go to the bank and tell the bank the situation. Give the bank the figure that can be paid and get the bank to reschedule the loan over whatever period works for the repayment that can be made. The bank may be resistant - despite what is said in the papers the banks aren't particularly helpful in my view when it comes to re-scheduling mortgages - but if you stick to your guns and push hard you will get it through. Don't go on the mortgage yourselves - you won't be helping your parents by doing thing, you will only be helping the bank.

Kate.