£50,000 Personal loan to help parents pay off mortgage

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Good Evening,

My parents have a house which they will give to me in the future (next 10 years in writing will). They have some savings and need another £50,000 to pay off fully the mortgage. I am willing to take out the £50,000 loan over 8-10 years as this will be my house in the future and it saves me a lot of money in the long run. The lender said they need to find £50,000 within 6 months where their mortgage term ends or they will be forced to sell the house which is not ideal as the area is really good and could easily double in the next 10-15 years.

Are there any banks that give personal loans without asking for the reason? Can you use it for other debt consolidation such as this case. My salary is around £35k.

Or can they downsize ?

They'll be too old now to remortgage. Their best bet is to market the house now and sell it. If they leave it until their mortgage runs out it will be repossessed and they will be evicted. By selling now they can keep control of the process and decide the price they will accept. If the building society repossesses they will sell it off cheaper for a quick sale so they get their money quicker. I take it they have asked for an extension to mortgage and been turned down? Asking BS for extension should be their first option. On £35k a year I doubt you'd get an unsecured loan for more than £15k max and interest rates are high ATM. They must have equity so could possibly downsize and be mortgage free.

They can sell you the house for 50k.

They cannot do this, so many issues, get proper legal advice.

https://www.co-oplegalservices.co.uk/media-centre/articles-jan-apr-2017/can-i-buy-my-parents-house-under-market-value/

They can. I bought my BILs property for the value of his outstanding mortgage.

These interest only mortgages are a nightmare. They are cheap compared to a repayment and a fair amount of people just don’t understand what they are buying. They just see the monthly payment is drastically less. I am helping a friend of my Father with one. He says he now realises why it was so cheap!!

What is the overall value of their house?

https://www.mortgagesforbusiness.co.uk/news-insight/2022/january/can-you-rent-to-a-family-member-under-a-buy-to-let-mortgage/

We can buy any property for any other human on the planet to live in can we, but not our parents?

What logic did you follow to reach that conclusion?

I'd guess that your parents selling their house to you for far below market value could be seen as deprivation of assets.

You can buy your parents house for market value. That’s not what is being talked about. For a start she doesn’t want to buy it and live in it now. It sounds like she will find the 50k difficult enough to pay off in addition to her own rent. How will she afford the stamp duty on what could be a very valuable house? Then as others have said, if they need care in old age the council could come after her for deprivation of assets. Plus if they claim benefits based on not owning a house. I’m sure there are other issues I haven’t thought of. Get legal advice.

Your parents can no longer afford their house.

They need to downsize and buy something they can afford.

Anything else is nuts.

Don't do it. It's madness. You're giving them an asset they don't have to or may not be able to gift you.

How are you so certain that the house will be yours in future?

Do they have a separate pot of cash running into the hundreds of thousands for potential care home fees?

What was the original plan for repayment when they took the mortgage?

You’d be nuts to do this. There is no guarantee that the house would be yours. They may need to use the funds for care fees, they may fall out with you and rewrite their wills, they may develop dementia and think it’s a good idea to leave the house to a donkey sanctuary.

if you give them the money you will need to do so on the basis that it is a gift, and that one day you may or may not receive the house/the money.

or else take legal advice to do it properly and formally and either become a co-owner or have a legal charge on the house.

What did they think 'interest only' meant?

This sounds very insecure and it seems (from the info given) that your parents haven't done a very good job of financial planning. You need financial advice from someone who has the full details of yours and your parents situations and is qualified.
From what you've said it sounds a mad idea and I doubt anyone would just lend you £50k. What you might be able to get though is a £50k mortgage if your parents sign the house over to you or sell you a portion. As others have said, the house will only come to you if it's not needed for anything else or neither of your surviving parents remarried.
If they don't find the £50k l'm assuming they'll have to sell up and will be homeless. They'll have some equity which will very quickly get eaten up in rent if neither of them plan to work again. If they have more than £16k they won't be able to claim benefits including the housing element of UC. If you're able to do it, it makes sense to buy into the house. You will of course need some agreement about rent.
It's a messy situation but it might just be salvagable

This sounds madness. Care home fees burn money. None of us can say we won’t need care.

The will idea is dreadful, any thing could change they could write you out of the Will tomorrow other the house could be sold for care fees.

She can buy it for the outstanding debt and stamp duty value.

If they need care then there is this amazing thing people can do, you may have heard of it, it's called selling a house. She's no worse off.

They can pay her the cost of the mortgage to live there as rent.

You can claim housing benefit.

I know all this as I have bought two family members homes, one of the arrangements is still going.

You are just guessing.

They can. I bought my BILs property for the value of his outstanding mortgage.

I hope you got good legal advice because you could end up with a huge tax bill if you bought the property for less than market value.

The Op can only buy her parents house for 50K, if the house is only worth 50K, without incurring an additional tax bill.

Don't do this!

A huge tax bill? How huge? As huge as capital gains tax? That huge? On the capital gain I make I will pay capital gains tax? Who'd a thought it.

Well blow me down.

This .