Parents will to buy with offspring

G

glueless

Registered User
Messages
22
Hi,
I've looked though the different threads on the site but can't find anything like my question so I do hope I'm not repeating.

My daughter and her partner are thinking of moving in together and renting an apartment. We (her parents) are anxious that she buys rather than rent and have offered to put our names to the mortgage. Does anyone know if this is allowed? She is only earning 27,000 and her partner earns 28,000 so they will need help if they are to get started. thye have some savings (10,000) and we are prepared to add another 20,000. The apartment they are considering renting costs 1200 pm. I believe this is dead money and they would be much better off putting their money into something they will own.
. Is there a website that gives all this sort of information. We own our own house and an investment home and overall have a mortgage of 100,000. Our PPR is worth approx 700,000 and the rental property about 320,000. What would the bank look at in order to approve both us and them for a mortage.
Any advice on the best way to approach this would be appreciate
Thanks in advance.
 
What you are proposing is certainly allowed but could have significant tax and ownership implications. The following Revenue links might be of interest to you:

  • [broken link removed]
  • [broken link removed]
Why not let them rent your investment property?

More contentiously perhaps ... why not let them stand on their own two feet and make their own decisions (and, if necessary, mistakes) - e.g. let them save and/or increase their earnings in order to get to a position in which they can afford a house purchase on their own? Note that if they are buying as an unmarried couple with or without your help they should draw up a suitable legal agreement governing the joint purchase.



Is there a website that gives all this sort of information
Click to expand...
What sort of information exactly?
 
have a look at www.mortgages.ie theres a good bit of info there. There is a mortgage calculator there and based on those earnings of 27 and 28k they could borrow 285K.

Paying 1200 pm is dead money, you are correct with that, but would they be comfortable buying a place together when not married as it may not work out and then you have to deal with a jointly owned property and sort out what happens it this case. They could just sell the place and split the proceeds.
 
If they've never lived together before it's probably wise for them to rent first to see how they get on in that situation.
 
This talk of rent being "dead money" is nonsense. It's like saying that paying for your groceries is dead money. If you need/want a product or service then you pay for it. This applies as much to rental accommodation as anything else. Of course if there are reasonable alternatives to paying for rental accommodation then it's a matter of weighing up the pros and cons/costs and benefits of each option and choosing the most appropriate for the circumstances of the individuals in question. Ideally the individuals themselves and not their mammies and daddies should make this decision.
 
ClubMan said:
This talk of rent being "dead money" is nonsense. It's like saying that paying for your groceries is dead money. .
Click to expand...

At 1200 per month they will spend 14,400 in one year on rent. This would pay a mortage of about 285 over 30 years. So if you spend that 1200 on buying a place then at the end when you sell it you will at least get all your money back and more than likely make some money.

I know there are assumptions on the market etc, and I am not considering tax issues etc but paying 14k a year on rent is daft if you have an option and ability to buy. From that point of view it is crazy.

If I had 1200 a month I'd rather pay a mortgage and have my own place rather than pay the mortgage of an investor and live in a rented place. Its a bit more fundamental than buying groceries. Renting is like paying for your groceries but you can only eat half of it.
 
Calm down clubman. Where did glueless say that the parents would be making the decision for the individuals? I'm sure they'll be well able to tell her parents if they don't want 20k and a help to get the mortgage.
Rent is dead money. Just because it could be argued that food is also dead money doesn't take from the fact that rent is dead money. At least there's no alternative to eating. If your kid becomes a teenager and keeps renting the same DVD every night mightn't you suggest loaning him/her the money to buy it instead?
In answer to your question glueless I'd say the best way to approach it is to go to a mortgage broker. I wouldn't imagine you having any problem getting a mortgage for them if you go guarantor.
 
and not their mammies and daddies
Click to expand...

Patronising or what, ClubMan! I agree with the sentiment to a certain extent, but there is a value in listening to the wisdom of our elders too, especially our parents who only have our best interests at heart. Glueless presumably has an idea as to whether her daughter is mature enough to take on this kind of responsiblity and indeed how solid her daughters relationship with her partner is. It may well be that her daughter would love to buy, but knowing she can't afford it right now, would rather rent than ask her parents for help. In any case, parents can often offer some advice and wisdom and help that their children need, and maybe the time is right for her daughter to buy. Obviously while renting her daughter will not be building up equity in a premises, and perhaps she may not be able to save to buy another place. Sometimes financially it makes sense to buy rather than rent, depending on your stage of life.
 
farmer said:
Calm down clubman. Where did glueless say that the parents would be making the decision for the individuals?
Click to expand...
As good as...
We (her parents) are anxious that she buys rather than rent and have offered to put our names to the mortgage.

...

we are prepared to add another 20,000.
Click to expand...

Vanilla said:
Patronising or what, ClubMan!
Click to expand...
Just my opinion and I did preface the initial prelude to this comment with a warning that it might be considered contentious...
 
Oh man not more of this debate between posters on their different opinions (and I have weighed in on it too).

Can we keep it focused on the quesitons raised by the original poster and not on this bickering. Or send Private messages if you want to bicker, its a pointless forum if its always goes off the point\issue of the original poster.
 
Some people should have a read at this... [broken link removed]

particularly the graph...

But, hey, it has never happend in Ireland since 1922, so it will never happen here :) It will only happen everywhere in the world EXCEPT
 
You could equally describe the interest component of the mortgage repayment (which makes up the lion's share of the mortgage in the early years) as 'dead money'.
 
well not really, the interest you pay is to enable to borrow an amount of money which in turn enables to buy a place. Rent gives you nothing in return. Sure you can live in a rented place but for the same money you can buy it.
 
SteelBlue05 said:
well not really, the interest you pay is to enable to borrow an amount of money which in turn enables to buy a place. Rent gives you nothing in return.
Click to expand...

Rent gives you a roof.
Rent gives you freedom shall you want to expore this world
Rent does not put you into debt
Rent allows to try "couple life" before large financial commitment are made
Rent protects you from negative equity (as i believe there is more room for
decrease than for increase in Ireland today)


There are good times for buying and there are good times for renting. Today is not the time for buying. 1990s were the good time for buying.
Ans as the price of property is cyclic, like the stock market... just have to capture the right instant.
 
Just to ask, could those who advocate renting tell us whether they own a property or not, or whether they are renting themselves?
 
bacchus: I think today is the time for buying for this couple as they're spending €1200 a month on rent with a combined income of 55k. That's a huge proportion of their income spent on rent. Maybe for a couple who are more willing to live within their means renting would be best but this is just too mad an amount to be spending (imho)
 
Last edited:
bacchus said:
Rent gives you a roof.
Rent gives you freedom shall you want to expore this world
Rent does not put you into debt
Rent allows to try "couple life" before large financial commitment are made
Rent protects you from negative equity (as i believe there is more room for
decrease than for increase in Ireland today)


There are good times for buying and there are good times for renting. Today is not the time for buying. 1990s were the good time for buying.
Ans as the price of property is cyclic, like the stock market... just have to capture the right instant.
Click to expand...

Buying gives you a roof, one you own.
Buying doesnt stop you exploring this world?
You'd rather pay a large yearly rent than be in debt? So you buy everything in cash? Your car?
True, renting does allow people to try "couple life" without the hassle of buying.

If now isnt a good time for buying then when is? 5 years, 10 years time? What are you going to do in the meantime, spend 14k * 10 years on rent (140k).
 
I think you are very nice parents wanting to help out your daughter like this. But as stated before, if you go on the mortgage, this is deeming the purchase as not being a first time buyer. Cashflow problem only.

Secondly, you have to consider that if you are going on the mortgage what way would the tenancy be set up, ie Tenany in Common or Joint Tenancy. Under Joint Tenancy, in the event of death of one party, his/her share is equally devided between the remainder. You have to consider here that if this was the case, you potentially have CAT on the suvivors, particularly your daughters partner as his exemption limit is quite low, around €23k. On top of this you have to consider here that you are potentially gifting a lump sum to assist them with their deposit. If this was gifted and you were also named on the mortgage, 1/2 of this gift would be added to the inherited part of the property under CAT rules. Under Tenany in Common, the deceased share passes under the will. Note here, the property does not have to be split equally under Tenany in Common.

In addition to this, there might be tax implication based on the fact that your daughter and partner would be living in a property that is not entirely theirs. Effectively, they would have half a house rent free. Whilst there is a special disponsation given to dependant relative living in rent free accomodation, I am not entirely sure how the Revenue would look at this one, never had to look at it before but it is an intersting one.

You should not have such problems if you went down the guarantor route but what will the lender give you.

Take care as your daughters partner is a partner and not a husband. I am not saying that you really have too much to worry about on this front, after all I do not know you or your family but it is well worth being aware of the problems. I hope it all works out for you and them. Good luck.
 
You must log in or register to reply here.
Back
Top