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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

AIBU to take all the equity?

507 replies

HalfwayCrook · 28/10/2018 20:16

So DM (working, healthy, in her 60s) has always been terrible with money and has a lot of debt hanging over her. The family home which has been on a 100% LTV interest only mortgage is coming to the end of its term next year and due to her age she will not be able to get a re-mortgage without getting involved in some dreadful equity release scheme or some such.

There is no question of downsizing or selling the property as she will not hear of moving house. The plan I have come up with is for me and DH to buy the family home for the price of the mortgage (i.e. being gifted £175k of equity which has been gained through price rise alone) and to then pay a repayment mortgage allowing DM to live there rent-free. This would mean that the family home is kept, the equity is not lost (particularly to pay off her other debts) and that she would free up significant monthly income by not paying the mortgage to pay off these other debts.

The issue is that I have a sister and I am concerned that she may see this as me taking away any chance of an inheritance? For background, although we have similar salaries she would not have the financial capacity to do this as she has just bought her own house (after living in the family home for 15 years not paying rent, bills or food). When she was looking for properties, I encouraged her several times to buy the family home instead but each time she refused (it is not in the best state of repair however perfectly liveable). As far as she knows, the family house is written off and is to be used to pay off debts etc. Also by DH and I taking this on, it will mean we are unable to upgrade our own home (living in a 1 bed flat) which means that we are taking on a big hit to our personal life e.g. less space to start a family. It has taken considerable stress and research in order to plan this and she would never have put forward this herself.

I feel that if we pay into this for say the next 20 years the proceeds from the resultant sale should be ours? However if by some terrible misfortune DM passed away in the next 5 years I accept that it would be best to share with DSis – perhaps two thirds to one thirds? AIBU?

OP posts:
slithytove · 29/10/2018 23:25

I didnt need the money for a buy to let, I wanted it for one.

And I was assured that once the money is in the account, if you change your mind what you are spending it on, there is nothing that can be done and it certainly isn’t fraud.

Anyway we aren’t with that mortgage company any more and there were no issues whatsoever.

slithytove · 29/10/2018 23:28

May not make a difference but we were approved for many mortgages offering additional borrowing - but all required us to buy the btl in tandem with the mortgage starting, and we wanted to wait a year or so. Hence changing the need for the additional borrowing - and we did do home improvements as well over the course of the mortgage fix so it would have been very hard to show what monies went where

CheesyMother · 30/10/2018 00:48

It might not need to be short term. According to money saving expert, most high street banks will lend to much older people - see the screenshot.

It's easier to borrow until you are older if it is a repayment mortgage. And as she will have 50% LTV then she should get the best rates - her age won't affect that. If she's only 60 then she should be able to get a 20 year mortgage with someone if she's got a decent pension income.

AIBU to take all the equity?
Original poster
HalfwayCrook · 30/10/2018 08:21

Sorry my fault DM is practically 70 so it would be 175k over a 10 year term really. We are currently trying to plan with her how to get rid of this debt asap so that by the end of the year she can hopefully remortgage in time? I am hoping that she has the confidence to go forward with this despite high monthly payments if she can rely on borrowing from us if and when necessary.

OP posts:
LethalWhite · 30/10/2018 08:50

She's nearly 70 but 'working and healthy' and you expect her to keep working for the forseeable future to pay off her debts?!?!

Hmm
irunlikeahipoo · 30/10/2018 09:56

What’s happens if you and your husband divorce under the strain of living with an obviously selfish woman ( that could be you or your mum. 😂)
You seriously think that a piece of paper he’s signed means he is going to keep on paying the mortgage on a house he no longer lives in

What if he remarries has children. Do you think his new wife would be happy with him paying a mortgage for his ex mother in law
He could go bankrupt and they could take his half of the house
Any decent solicitor would advice your DH not to agree to such a stupid contract that say even if you divorce he has To carry on paying the mortgage
This rarely happens when couples divorce they normally buy each other out or the house gets sold

CarrotVan · 30/10/2018 12:27

Your mother needs to see a shit hot IFA accompanied by you and your sister with a full list of assets, debts, income, expenditure and guaranteed future income/expenditure

The IFA should be able to do an options appraisal and if any of those options involve you taking ANY active role in your mum’s ongoing financial situation then you should take seperate independent advice

Quite frankly this is a crazy situation

ForgivenessIsDivine · 30/10/2018 12:51

Your mother has debts of 75k despite what you call a good salary and good pension provision. She doesn't believe in paying off her mortgage but has lived there paying only the interest for presumably 25 years. In addition to the 75k debt she owes 175k to repay the loan on her house. She is in her 60's so has a few years of working life left followed by retirement funded by her pension which is likely to be less. You say that there is some form of income due in years which will pay off the 75k debt and that the end of the mortgage is imminent. She also needs to consider how her old age care will be funded. I would get her to sit down with a financial advisor and work all this through and look for solutions. On the face of it.. this equity is not available because the mortgage needs to be paid off in order to access it. When she has this discussion she could mention your offer to repay the house loan using a mortgage paid by you. However you and she justifies it, she will need to find some way to pay for somewhere to live for the next 20 or so years.. either she pays rent somewhere or she uses her equity to pay rent. You talk about her generosity and imply she has lots of money... she needs to make this work better for her and she needs to settle her debts and plan for her future. You cannot do that for her.

hello1233 · 30/10/2018 13:03

Is the 75k she's got coming in a few years another "inheritance"? Don't bank on that coming either. They might give it to the dogs home

buckingfrolicks · 30/10/2018 13:46

I think there's a clue in the OP's name tbh

Myimaginarycathasfleas · 30/10/2018 13:47

ForgivenessIsDivine the OP’s mother has gone from “working, healthy, in her 60s” to “practically 70” in the course of this thread.

I feel it has aged me similarly. Hmm

Original poster
HalfwayCrook · 30/10/2018 15:03

I have already said that through this discussion I have decided not to go ahead with this plan! Yes practically 70 i.e. 68...

DM has agreed to pursue repayment mortgage options with borrowing from us if necessary if she struggles to make the monthly payments.

OP posts:
19lottie82 · 30/10/2018 15:12

Your mum needs to sell, downsize and
sort her finances. Sad, yes, but her bad financial decisions are not for you to
resolve.

This, with bells on.

She won’t hear of downsizing? What does she think will happen when the IO mortgage comes to an need and she can’t pay the remainder of what’s owing on the house?

Eilaianne · 30/10/2018 15:39

DM has agreed to pursue repayment mortgage options with borrowing from us if necessary

Op you need to extricate yourself from bailing out her financial mismanagement.

Borrow implies paying back - there will be no paying back if she continues to live beyond her income and starts using "borrowed" money from you to prop her up.

Hopefully whoever she approaches about remortgaging (broker, bank, building society) will see the red flags a mile off and force her to sort herself out.

Original poster
HalfwayCrook · 30/10/2018 16:13

Oh dear God she has found an interest only mortgage option. Prolonging the inevitable another 10 years!

OP posts:
Tistheseason17 · 30/10/2018 16:19

10 yrs is a long time.
Things change in 10 yrs and she may decide to downsize at the end.

Kinda puts a downer on you getting the inheritance locked down, now, eh?

Shame about that...

hello1233 · 30/10/2018 16:47

Good news for your sister then. Won't be swindled

Jaxhog · 30/10/2018 17:00

Firstly, please get some legal advice. This is a huge commitment to take on, and you need to cover all possible eventualities.

Surely though, if you buy a proportion of the equity, then any inheritance is 50% of what remains goes to each of you (after any IHT)? Ownership of the house would also be in both yours and your DM's name.

IamtheDevilsAvocado · 30/10/2018 17:57

Your mum sounds wilfully dizzy...! .

What she says is completely incoherent... On the one hand she wants the house 'in the family', but refuses to ensure that she pays the mortgage....

Shes also doesn't appear to understand the word 'equity'.... If she gets rid of the equity in some scheme... There will be no house to 'keep in the family'!

Walkingdeadfangirl · 30/10/2018 18:25

she has found an interest only mortgage option
Surly that would give her time to sort out her finances. Maybe OP could take control of her income, pay off her debts and some of the mortgage every month, whilst giving her whatever spending money she needs. And in ten years review, hopefully you will all be in a better position.

Gazelda · 30/10/2018 18:26

Oh dear God indeed! If I were you, I'd be talking to your sis pronto and together telling your DM that she must consult with an IFA about her long term financial plans.
You should both be there.
You should have no further involvement in her debts, mortgage, costs etc. She is irresponsible and not listening to sense. She seems to think you'll bail her out so she can just firefight and ignore practicalities and planning ahead to ensure financial security for herself.

wowfudge · 30/10/2018 18:34

I'm beginning to wonder if the OP's mother isn't actually extremely manipulative. The IP mortgage option leaves her no further forward and is likely to mean there will be nothing for the OP and her sister to inherit. No one has a right to an inheritance, but is the mother deliberately coming up with this codswallop in order to get her DD to stump up instead. Mother maintains her spendthrift lifestyle without ever taking responsibility for her finances properly. The equity in the house is the carrot. But the equity in the house pays her debts. OP and DSis get nothing.

wowfudge · 30/10/2018 18:35

IO not IP!

PumpkinKitty82 · 30/10/2018 18:45

Something similar ..
My dh helped his parents buy a house so they could remain in the area as houses are very expensive and they wanted to still be near the family.
They put up about half the money and dh pays the rest of the mortgage every month.
This has caused some tension with his older brother (older sister is fine ) as he sees at at dh getting more when they pass away which he will but only the money he has put in and the equity and then the same amount as the rest of them in inheritance .
I don’t see this as being unfair as it dh’s money and it held us back for years as we struggled to get 2 mortgages .
His brother will be a nightmare when the sad time comes

PumpkinKitty82 · 30/10/2018 18:47

Should say *it as .
And just to clarify the mortgage is in both dh’s name and his parents .