Please or to access all these features

Add post

Watch this thread

Save thread

Start a new thread

Flip thread

Hide thread

My feed

Active Unanswered threads

Getting started FAQ's

Unanswered threads Acronyms Talk guidelines

Hide shortcut buttons

Talk

AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Flip

1 2 3 4 5 6 ··· 20 21

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:

SputnikBear · 28/10/2018 21:40

OP actually your best option would be to move in with DM and buy her out of a share of the house, on the understanding that she leaves the house to you in her will. Then if she needs care the LA will be unable to take the house because you’re living there as a part owner. There is literally no other way to prevent them taking the house if DM needs care.

Dollymixture22 · 28/10/2018 21:40

DSis should get half the equity because it’s fair. She can’t have it now but she should get this when you eventually sell the house.

You are refusing to see any other opinion. You want to take the equity as your own - a bonus for helping your mum out. But the house is also an investment.

You could calculate the rent you would make if your mum wasn’t living in the house and subtract it from the £100k. If there is anything left over then split it with your sister?

Just try and be a bit fair, talk to your sister.

Ignoramusgiganticus · 28/10/2018 21:40

First of all you need to discuss this with your sister openly and honestly then you need to get anything agreed legally drawn up to be as water tight as possible.

TheBlueDot · 28/10/2018 21:41

You need to talk this through with your sister. There is huge potential for a family fall out when your DM passes away and your sister finds out you own the family home, having paid far less for it than the market rate.

Also I think the local council will see this as deprivation of assets, particularly of you but it for less than the market value.

MaryPoppinsUmberellaHandle · 28/10/2018 21:41

So because she refused to buy the family home, and enable your Mum further, she should have no inheritance and you the knight in shining armour gets everything.

Your Mum could still be comfortably off if she released equity, or sold the house for market value - what is market value OP?

UnRavellingFast · 28/10/2018 21:41

You can remortgage after 60 years. Talk to another broker. What’s the ltv now? My dm remortgaged her house after 70. She had good equity which helped.

Original poster

HalfwayCrook · 28/10/2018 21:41

No if we are not involved she will get involved in some scheme rather than downsize. She is happy to lose the equity completely.

Yes I am happy to give some equity to DSis but feel 50/50 is completely unfair in this situation.

Well I think in a divorce DH would continue to pay as it would be in his interests to surely?

OP posts:

ReanimatedSGB · 28/10/2018 21:41

I think you should talk to a financial adviser about all the legal aspects before you do anything. It does sound a bit as though you a) think you are the only person in your family who is able to manage money and b)therefore you are the one entitled to take control of the family assets.

reallybadidea · 28/10/2018 21:44

Essentially you're proposing to do an equity release scheme, except you'll be the ones getting the equity. I can see why this is a very attractive option for you, but I think if you're going to do this you need to make it crystal clear to your sister what she stands to miss out on financially. If you don't do this then you are morally, if not legally, conning her. The deprivation of assets if she needs care within 7 years is a risk, albeit a small one if she's only in her 60s and currently healthy.

I do get the sense though that you're happy to stiff your sister over this though

Original poster

HalfwayCrook · 28/10/2018 21:44

Yes I have not hidden that part of the motivation would be to take the asset out of DM's name due to the debts. Just being honest and it is what she wants too.

OP posts:

Original poster

HalfwayCrook · 28/10/2018 21:46

Of course DSis will hear about this, that would be ridiculous to go ahead behind her back! I am gathering opinions in advance about what to propose and what is fair as I do not think 50/50 is.

OP posts:

MaryPoppinsUmberellaHandle · 28/10/2018 21:46

I think you are a disgraceful person for even considering fucking your Sister over like this.

Why the fuck should you get all the equity?!

I never get angry or lose my temper with anybody on here, but you're beyond belief.

You should be ashamed of yourself. I hope you get taken for every penny, when you're chased for any of the above reasons previously explained to you.

HauntedPencil · 28/10/2018 21:46

The reason this sounds like a bad idea to mr first and foremost is that you seem to be mainly doing it to prevent the equity being used.

There are other ways you could invest the mortgage payments over 30 years without getting involved in this potential shit show.

No one can be in any way sure they'll get any of their parents equity.

Jenny17 · 28/10/2018 21:47

Whatever you do please get advice and everything out in the open and in writing.

Original poster

HalfwayCrook · 28/10/2018 21:48

Well we would be taking the hit that DSis refused so why should it be 50/50? We are living in a 1 bed and paying DM's mortgage whilst she lives completely uninvolved. She was encouraged to do what we are doing many times but refused to get involved with DM and her finances.

OP posts:

Darkstar4855 · 28/10/2018 21:48

If your mother owes £75k but has £175k in equity then the equity should be used to pay off her debts first. You gaining the equity in exchange for helping her dodge her debts sounds pretty immoral to me.

Original poster

HalfwayCrook · 28/10/2018 21:49

Yes of course we should get further advice and everything in writing but I would not want to involve DSis until at least the basics have been considered and we have the right information.

OP posts:

Tistheseason17 · 28/10/2018 21:50

AIBU? YES
No, I'm not.....

Here we go again....

Myimaginarycathasfleas · 28/10/2018 21:51

There are so many reasons not to do this I don't know where to begin.

First and foremost, if your DM is hopeless with money she isn't going to get any better just because she is mortgage-free. She will just have fewer restrictions on her spending.

You will be tied to that property for as long as she lives. If she doesn't want to move while she's fit and active, she sure as hell won't want to when that's no longer the case. You will have all the cost and hassle of adapting it for her as she declines. That could be twenty years from now, and for years beyond that.

What if your own circumstances change? Suppose you could no longer service the mortgage for some reason?

This sounds harsh, but people need to get away from the notion of "the family home". You are not landed gentry, it's just a house one member of your family currently occupies. And she can't afford it.

If she were in her eighties I'd have more sympathy, but she's my age. She may not WANT to move, but she is going to have to. She could and should settle her debts by releasing equity from the sale of the house.

I don't mean this unkindly OP but you are getting carried away with the possible financial opportunity. It actually comes with a lot of hidden personal costs which I don't think you have considered.

Puzzledandpissedoff · 28/10/2018 21:52

For all the reasons PPs have given, this whole idea has so much potential to go wrong that it makes my head spin

Given that healthy, working DM has got herself into this mess, why is so much attention being paid to her wish to stay in the house? Why on earth can't she sell it, settle the debts and buy a 1 bedroom flat with the balance, leaving you to arrange your own finances without all these complications?

Kardashianlove · 28/10/2018 21:52

Well if we did not do this we would take on a big mortgage of our own anyway so financially it is the same either way regarding losing jobs etc (1 large mortgage vs 2 smaller).

It’s really not the same at all. If you had one big mortgage and lost your jobs, you could sell and downsize. You couldn’t do this with your DM house without giving her nowhere to live.
It’s easier and cheaper to maintain one larger property than two smaller ones.

I think you are also underestimating how much difference a bigger house compared 1/2 bedroom flat will make if/when you have DC.

Also, things like if you have a DC with disabilities and need to move to an adapted house/bungalow. It’s a long time to be tied financially and emotionally as it sounds like your mum’s want of keeping the house will come before everything - but once you have DC, it can be a completely different thing and trying to choose whether to put your DC or mum first can cause problems.

In terms of the equity, I’m sure if you invested the money you would use to buy your mums house, these would be better ways of making money to match the equity.

Your mum has made these choices, it’s not up to you to rescue her at your own detriment.

I would discuss with a good financial advisor for an unbiased professional perspective.

Quartz2208 · 28/10/2018 21:53

It is a terrible idea for YOU. You cannot put all your money into a house you may not see the benefit from for years and keep yourself in a one bedroom flat. You cannot pay the mortgage on that house and not live there - you are putting your own life on hold to sort out your mums mess

Your sister sounds right - she didnt want to buy the house

Your DM has gotten herself into this mess - she needs to face up to the fact that she needs to downsize

HauntedPencil · 28/10/2018 21:54

You only seem to be interested in the issue of what your sister might or not get.

You sound a bit greedy and your motives are murky.

TwoBlueFish · 28/10/2018 21:54

You, your mum and sister need to get proper legal advice. If everyone is agreed and you are prepared to pay stamp duty, upkeep and everyone prepared for the risks then off you go www.co-oplegalservices.co.uk/media-centre/articles-jan-apr-2017/can-i-buy-my-parents-house-under-market-value/

Personally I think it’s your mums issue, she either downsizes and clears her debts (sensible choice) or takes equity release so she can stay in the home.

Original poster

HalfwayCrook · 28/10/2018 21:54

Replying to myimaginarycathasfleas, DM will not be getting into further debt. She is keen to resolve her situation now and regrets past actions.

Yes I am happy to take on any cost of adaptation or hits in the future, after all that is the point to take the responsibility away from her. I would want to do this for DM anyway. If I could not service the mortgage then that would be the same as if I could not service a large mortgage on a family home too, we would be forced to sell I suppose.

I completely agree she should downsize however that will not be happening and there is nothing I can do about that!

OP posts:

Flip

1 2 3 4 5 6 ··· 20 21