Hi All,
Not sure if this is the right location to post this query but here goes.
My parents are mid-late 50's. My father is not in particularly good health and may not resume work after a recent health scare. This has caused a lot of stress with regard their financial affairs.
They have a big farmhouse on approx 30 acres, MV c €1 m maybe. There is a mortgage of approx €35 k on this property as well as a credit union loan of €20 k used for works on the farm.
Presently mortgage repayments are covered by payment protection insurance but this wont last forever. If they were debt free they would be comfortable enough as they have savings and will be entitled to state pensions and work pension etc.
As a solution to this problem the 4 kids, myself included, have agreed that we could buy the property from them for a sum sufficient to clear there debts and give them a small lump sum. 100 k in total. Parents are delighted with this solution as without question the property will ultimately be ours anyway.
Repayment capacity is not an issue as there is joint income of €250k+ between the kids with modest enough debt levels.
Some issues that I have thought of
- We would need to sign a right of residence for parents to the property for as long as they live, not an issue from our side but will this affect bank willingness to accept the property as security. Id imagine the low gearing is somewhat of a mitigant.
- is there a tax implication for us buying so far below market value?
- Two of kids have properties already, the other two dont. We dont want to damage the first time buyer status of the other two. Any suggestions how we could get around this i.e. is it possible to put 4 names on loan and two on title? Could a side agreement be put in place to ensure the FTB rights are protected?
- Easiest thing is just to take over repayng the debts, but they are short term loans and are costing currently 1000+ each month, taking out the mortgage ourselves its approx 550 pm. I understand the impications around additional interest cost etc but at the moment we want to keep cashflow as tight as possible.
Am I missing any obviosu issues here? Any suggestions or recommendations would be appreciated.
Not sure if this is the right location to post this query but here goes.
My parents are mid-late 50's. My father is not in particularly good health and may not resume work after a recent health scare. This has caused a lot of stress with regard their financial affairs.
They have a big farmhouse on approx 30 acres, MV c €1 m maybe. There is a mortgage of approx €35 k on this property as well as a credit union loan of €20 k used for works on the farm.
Presently mortgage repayments are covered by payment protection insurance but this wont last forever. If they were debt free they would be comfortable enough as they have savings and will be entitled to state pensions and work pension etc.
As a solution to this problem the 4 kids, myself included, have agreed that we could buy the property from them for a sum sufficient to clear there debts and give them a small lump sum. 100 k in total. Parents are delighted with this solution as without question the property will ultimately be ours anyway.
Repayment capacity is not an issue as there is joint income of €250k+ between the kids with modest enough debt levels.
Some issues that I have thought of
- We would need to sign a right of residence for parents to the property for as long as they live, not an issue from our side but will this affect bank willingness to accept the property as security. Id imagine the low gearing is somewhat of a mitigant.
- is there a tax implication for us buying so far below market value?
- Two of kids have properties already, the other two dont. We dont want to damage the first time buyer status of the other two. Any suggestions how we could get around this i.e. is it possible to put 4 names on loan and two on title? Could a side agreement be put in place to ensure the FTB rights are protected?
- Easiest thing is just to take over repayng the debts, but they are short term loans and are costing currently 1000+ each month, taking out the mortgage ourselves its approx 550 pm. I understand the impications around additional interest cost etc but at the moment we want to keep cashflow as tight as possible.
Am I missing any obviosu issues here? Any suggestions or recommendations would be appreciated.