Parents To Old To Take Mortgage. Can I Stand For Them?

[crazygirly]

Hi All

Been asked by parents if i would submit my yearly income etc to mortgage advisor because they are 1. just over 60 years old and possibly cannot get a mortgage and 2. havent been in the country long enough working.

Is this a wise move i'd be making?? By the way this would be for a mortgage so they could 'buy to let' the property.

[KJN]

If the mortgage advisor has asked details from you it seems to me that somehow you will be liable for part of the mortgage or all of it, in my opinion if your parents do not have the funds to buy outright at their age they should not be going ahead, buying to let has its problems, suggest you have a good look at this transaction before committing yourself.

[crazygirly]

Thanks KJN, i spoke to an advisor about this a while ago who said it would be a good thing to do as it would show that i could be given a mortgage and able to pay it back. My parents have promised me that when they pass over then the house would become mine. Im thinking thta maybe some form of paperwork drawn up stipulating this would be a good idea as i have a younger brother with whom i get on with but parents have said this property would become mine eventually.

[bednobs]

that's of course if they live long enough to pay the mortgage off! If not, you'll be stuck with a house that's mortgaged (perhaos in negative equity etc) what happens if you want to get a mortgage yourself ?

[KJN]

It is hard to comment further without knowing the full facts like who is going to live in the house, how much liquidity will be in the house when purchased , who will receive the rent etc, . I strongly recommend you see a solicitor, who will explain the negatives as well as the positives which your Financial Advisor does not seem to have done.

[Graham-W]

Another danger is if one dies and the other ends up in a home or both end up in homes. The property would then have to be sold to pay their care-home fees. The capital is then gone in no time (down to the £23,500 limit.)

[Zacs-Master]

Too many unknowns. Some good advice here:
https://www.moneyadviceservice.org.uk/en/articles/buy-to-let-property-investments

[Old_Geezer]

Maybe you should buy it for them and let them live there. May need a nominal rent or something.

[bednobs]

out of interest, are they renting? If so, what do they hope to gain by getting a buy to let place? - ok so they'll get rent, but surely that will be going to pay for the mortgage? they obviously don't want it for a nest egg, if they are going to be giving it to you, or a retirement plan, as they are coming to retirement age now having a BTL isn't always easy - tenants do flits, thinks break and need redecorating etc

[Old_Geezer]

Sorry failed to read to the end and see it wasn't for them to live in.
Best of luck to them with the investment attempt.
But be a guarantor willingly, knowing the possible consequences rather than feel obliged. Make sure you haven't got more involved than you can afford to be.

[woofgang]

So where are they expecting to get the money from to pay the mortgage and the other expenses that btl incur? What guarantee have you got that you won't end up up sh1t creek.

[crazygirly]

Thanks all for your informitive answers. Parents are needing me to stand as im young enough and have all the pluses i.e. long standing income etc. Im feeling really pressured about this with it being my parents and i feel obliged to help them out of a hole, so to speak. It started where my fathers aunt died and he is guarantor of the assets, house etc. My father had approached my brother who flatly refused basically saying 'what would he get out of it'! I currently have a mortgage already as does my brother. i have been down a lets say 'big idea' like this of my fathers before where we did a house up for a friend and any equity that was above gained from the renovation was to be shared out......sadly he and his friend fell out big time and i never saw a penny! im really in the middle of loyalty and sensibility and not sure which way to go.....

[mccfluff]

sensibility :-)

[boxtops]

I'm afraid I would be sensible in this situation, and say that you already have enough financial commitment with your own mortgage, why would you want to become embroiled in a second one? If their mortgage is based on your income then surely you are liable for all the payments? It's a daft plan - why buy Buy to Let when they can't afford to Buy. Really stupid idea on their part, IMO - don't get involved.

[woofgang]

You know really.....you have lost out once....don't do it. I am not sure what you mean by "he is guarantor of the assets" which "he" do you mean (bro or father?) and what do you mean by "guarantor of the assets?" ?

[crazygirly]

Woofgang my father is executor sorry i got my titling wrong, i meant executor and he is wanting to buy his sister out of this said house their deceased aunts)

[ubasses]

I do not understand why they need your income for a Buy to Let mortgage. These should stand alone based on the income from the property. ie, rental income should usually be about 125% of the monthly interest on the mortgage. Although different companies set a lower age for repayment than others they should be able to get one up to age 75. If he owns 50% of the house already this would more than cover the deposit.

[crazygirly]

Thanks ubasses, im not sure whats going on here.

[woofgang]

Same advice again, don't touch it with a very long bargepole.

[Peter Pedant]

oddly enough, purchase of a house in the name of another
which this almost is....
is covered by English case law from 1767
http://en.wikipedia.org/wiki/Dyer_v_Dyer

it depends on whether you would be putting up the deposit

if you were on the mortgage it is clear to me that you would be liable to pay if the rent didnt come pouring in

Frankly your father sounds like a sixty year old wide boy who Won't Give Up. Especially when there is money to be made out of the family.


Does it sound like a runner - the business idea I mean ? No it doesnt

You should tell him you are mortgaged up and there isnt anything spare for him. If he says oh they dont need to know about the first mortgage, then mention the 'f' word - erm fraud that is.


crazygirly - dont be that crazy - a second time !