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Original poster

PIL want us to buy their house

197 replies

Gogodonu · 04/06/2024 22:52

Anyone have any advice or experience with the following situation
My PIL are in their early 70s and in good health, they are struggling with cost of living increase and although mortgage free have ran up some debts and just not managing to live on their income well. Their only source of income is the state pension.

Their home is worth approx 220k. They want to either do an equity release or for us to buy their home and they pay the mortgage on it. We have reservations about the second option encase they spent all the money and couldn’t pay the mortgage.

Does anyone have any experience with this?

Thanks

OP posts:
Nat6999 · 05/06/2024 01:27

My ex inlaws did equity release to do some adaptions when ex mil became terminally ill. Everything was fine until they both died & the amount that they owed practically swallowed up all they left. They would have been better off spending their savings instead of doing the equity release.

MegsNaiceJam · 05/06/2024 01:33

Sell up, pay off debts. Use the rest of the money to go live in all inclusive hotels cheaply abroad. I know two unrelated pensioners who have done this very successfully. I also have a friend who works remotely, air bnbs his house and goes on cheap holidays with good wifi and works from abroad.

FictionalCharacter · 05/06/2024 02:28

Absolutely do not get financially entangled with them. It's extremely risky.

Mummyoflittledragon · 05/06/2024 05:04

I’m a landlord. On costs are high and you have to pay tax. I wouldn’t do this. They can’t afford to live even without a mortgage. I’d say the best thing to do would be to sit down with them and budget or get them to citizens advice to do the same. The best help you can give is always going to be practical. You could pay for them to get some advice from a financial advisor. But no, I would strongly advise against buying their house. This will cause massive issues in the longer term.

Motheranddaughter · 05/06/2024 05:19

Equity release can be fine for the older person
It’s the children who then don’t inherit that tend to complain !
Suggest taking proper financial advice
Are they getting pension credit
Are the family able to help out financially

Motheranddaughter · 05/06/2024 05:24

@Nat6999
It worked for them as they got to stay in their own home with some cash to spend

WoshPank · 05/06/2024 06:18

There are some areas of the country where social housing specifically for over 65s might be an option. Worth looking into, as it's vastly less competitive than other SH.

TemuSpecialBuy · 05/06/2024 06:21

bridgetreilly · 04/06/2024 22:53

I would not offer to buy it. They need to look at equity release or downsizing.

If they are on state pension, they won’t be able to pay the mortgage and they will run down the cash a lot faster than they expect.

Edited

Yep.
This all day long.

Do not take out a mortgage

Mabelface · 05/06/2024 06:23

Bigsislookingforadvice · 05/06/2024 00:18

If it's just state pension you could check if they are entitled to any further help with pension credit top up or maybe they could get a lodger to help top up their income. Try to support them in finding ways to help themselves without you taking in the burden

Agree with this about pension credit and council tax help. Also if they have any care needs, attendance allowance.

SoupChicken · 05/06/2024 06:23

Nat6999 · 05/06/2024 01:27

My ex inlaws did equity release to do some adaptions when ex mil became terminally ill. Everything was fine until they both died & the amount that they owed practically swallowed up all they left. They would have been better off spending their savings instead of doing the equity release.

Christ, why on earth would you do equity release if you had savings available????

Longdueachange · 05/06/2024 06:36

They need to be speaking to Citizens Advice to look at options. This post highlights why private pensions are so important, as the state pension really only covers the basics. I know one or two 70 years olds who still work part time, so if they haven't been able to save for a pension and are fit and healthy, they really can't afford be be retired.

Ellie1015 · 05/06/2024 06:42

If I could afford it I would take out a loan to consolidate their debts and they could pay that back at an affordable rate. If they die before debt repaid then agree with any other siblings this is paid from inheritance.

GoodHeavens99 · 05/06/2024 07:20

Gogodonu · 04/06/2024 22:52

Anyone have any advice or experience with the following situation
My PIL are in their early 70s and in good health, they are struggling with cost of living increase and although mortgage free have ran up some debts and just not managing to live on their income well. Their only source of income is the state pension.

Their home is worth approx 220k. They want to either do an equity release or for us to buy their home and they pay the mortgage on it. We have reservations about the second option encase they spent all the money and couldn’t pay the mortgage.

Does anyone have any experience with this?

Thanks

I wouldn't recommend equity release. My in laws have done it, and it's caused nothing but problems.

Minfilia · 05/06/2024 07:23

You’d be taking on a significant debt and two unemployed tenants.

You could also be liable for tax on the rent they’re paying to you and end up worse off.

No way would I do this!

Jeezitneverends · 05/06/2024 07:33

Getting a relative to take on extra debt in their name when you can’t manage on your income is always an excellent idea….

Run a mile!

They need to downsize

Ginmonkeyagain · 05/06/2024 07:41

If you plan to buy their house with a mortgage you may be very restricted in terms of lenders. Banks don't really like you renting back to the previous owners.

The whole thing is a terrible idea. Could you pay the mortgage if they could not? Would you be prepared to evict them if they defaulted? Do you have the momey to carry out repairs and any needed upgrades? They have an asset - a mortgage free house. So they need to use that to resolve their money issues and not drag family in to this mess.

CoolShoeshine · 05/06/2024 07:45

What exactly do your PILs think that this arrangement would do for you? It will benefit them massively but be a major burden for you and your dh. They’re in their 70s so could have 20 more years of living beyond their means. What is the cost of an average 1 bed flat in their area? They could well be quids in even with the cost of moving.

Dearg · 05/06/2024 07:46

On a practical level, if you chose to do this, the mortgage would need to be buy-to-let, and they would be renters . So, the home would also be subject to all those landlord obligations, and you would have to declare the rental income for tax purposes. This is unlikely to be cost effective for either of you.

My MIL had the same bright idea about 15 years ago. She had to downsize , and once she had, was very comfortable, both physically and financially.

GoodHeavens99 · 05/06/2024 07:47

My in laws are a nightmare for spending money they don't have.

They have a big branch of Aldi on their doorstep, but only Waitrose is good enough, apparently.

They've had lots of issues with money that my husband and his siblings have had to sort out, including clearing one of their credit card debts.
They had about 3, or 4 credit cards, at the time.
Which my husband has now confiscated.
Their attitude to the credit card was as if it were a pot of money to be used whenever.
Rather than it being something they would have to pay back, at some point.

None of the credit cards were on 0% interest deals, and they were only paying off the interest each month.
My husband was horrified when he found out.

My father in law spent £7k on a cruise.
My husband wanted us and his siblings to pay it back.
I love my in laws, but i objected to funding a lifestyle that we can't afford to have.

hopeishere · 05/06/2024 07:48

How much debt are they in? Could you help them with the debt and a budget?

Do you already have a mortgage? Would you be able to get another one?

Choux · 05/06/2024 07:50

*Also re care fees if one of your PIL needed care their half of the freed up house equity would be considered to pay for it - where if they both live in their own home the value of their home would not be considered while their partner still lived there.

If you have spare cash available you could simply loan your PIL some money and have a charge registered against their property to ensure this money is repaid to you when the property is sold. E.g. loan them 20k and put a 20k charge against the property to ensure that you get it back.*

These are very good points - the PIL need to consider more aspects than just a quick way to get hold of some of the property's value to spend it. They need to do some financial planning.

If in good health and early 70s they could each live for another 15-20 years. Alternatively one could die tomorrow leaving just one pension income - the man generally has a lower life expectancy so MIL is likely to have some years as a widow. How will she cope financially? And if they want to stay in the current house now, will they be willing to move to something more suitable once they can't manage stairs. The Elderly Parents board is full of threads about parents in denial about their health and being resistant to change / clinging to happy memories of their now impractical home while their adult children run themselves into the ground trying to care for them and stop the whole house of cards falling down.

My advice would be to go through their finances with them - are they on best deals for utilities, insurance etc. Age UK can advise if they are entitled to further benefits, pension credits, allowances, housing options.

Have they literally zero savings now? Did they never pay into a workplace pension? I would have thought most men of this age did even if only for second half of working life.

Look at different housing options with them - eg over 55s specific housing which may be on one level, with other similar age people around to provide a community which is important. Discuss with them how they see their future especially if one gets ill and needs care from the other. Sort out Power of Attorneys and wills if needed. They might be difficult conversations but living through a difficult situation because you didn't have the difficult conversation is worse. And the difficult situation can go on for years.

Beautiful3 · 05/06/2024 07:50

They never going to be able to afford the mortgage repayments. I'd look into equity realise, or downsizing to a ground floor flat.

InSpainTheRain · 05/06/2024 07:50

Could they make money by letting a room out instead?

Alwaysalwayscold · 05/06/2024 07:51

They need to downsize. Look into small bungalows or park homes. They can't afford to like in their house anymore and need to accept that.

Strictlymad · 05/06/2024 07:52

This would be a seriously complicate scam of worms….. I would be encouraging them to downsize