Re: Releasing money from parents home.....??


Paul wrote:
> Firstly, thanks for responding....
>
> I'm not sure how much I can elaborate...let me try.
>
> My wife and I would like to move now rather than in several years time.
> I have a good salary but am maxed out due to my CSA payments, existing
> mortgage and the fact that my 2nd wife has now left work to look after
> our kids 2yrs and 7 months old.
>
> A common story I'm sure.
>
> Also, without being morbid or totally materialistic we are aware that
> we will 'probably' inherit some money in years to come.
> Sources are My wifes parents, my mum, my grandmother and my great aunt.
> (I can't believe how bad that sounds when written down). We are just
> being realistic though and it is an open discussion subject in the
> family.
>
> So, chances are we will get 'some' money over the next few years. All
> houses in question are owned outright and it would be good to free up
> 50k-80k in advance.
> Our current house is ok and we don't NEED to move. However, our current
> house is a corner plot place and is one of the best (in terms of price)
> places in our road. It's value is capped though by the value of the
> other places in the street and it would be better to move now(ish)
> while I still have some years of mortgage payment potential left in me
> - I'm 43 with 10 years on my mortgage and a desire to retire at 58-60
> years old.
> It's not worth moving and putting (say) 20K on the mortage as 10K (ish)
> will be wasted on stamp duty / estate agents / solicitor etc etc. THEN
> we will probably decorate. Net result = a 20K hike in mortgage which
> mostly gets swallowed up in the move process. We need to move in a
> bigger step in my opinion.
>
> So, this is just a thought starter. A simple investigation into the
> possibilities that 'might' be open to us. We are not pushing our
> parents (it was their idea to be honest) - I'm just keen to find out if
> others have done a similar thing or if there are schemes/ideas that I
> don't know about. I'm an engineer not a financial bod.
>
> Thanks in advance - any advice is much appreciated.
> Regards
> Paul (and Lisa)
>
> sylvian stone wrote:
> > Paul wrote:
> > > Ok, I've looked through the various newsgroups and websites and quickly
> > > came to the conclusion that I'm confused.
> > >
> > > Can I please run my scenario past you guys and ask for your opinions?
> > >
> > > Situation:
> > > My wife is one of four kids.
> > > Her parents are both alive and live in a house worth about £400k
> > > We would like to move into a bigger house (with our children, dog etc
> > > etc) but can't afford to move.
> > >
> > > Is there a way that we can realise some of the inheritance ahead of
> > > time?
> > > This has been a suggestion of my wife's parents rather than something
> > > we have pushed for, but to be honest I really don't have a clue how to
> > > look into this. I have a feeling thate avoiding the involvement of
> > > finance companies 'might' be a good idea. My vision was that maybe the
> > > four siblings could jointly become involved in making something happen
> > > - just a thought.
> > >
> > > Anyway, any ideas?
> > >
> > > Thanks in advance,
> > > Paul
> >
> > You probably need to take specialist advice on this, as it depends on a
> > lot of factors. A big one is whether the house forms the bulk of their
> > estate, or whether they have other liquid assets that they can realise
> > or reinvest in other ways.
> >
> >
> >
> > If all they (you) want to do is to raise cash now, and assuming that
> > they want to remain in the current property (instead of selling it and
> > moving to a smaller property), then I guess Equity Release is really
> > the only way to go. [I'm assuming they own their property outright]. In
> > this sense, you can't avoid the 'finance' companies or insurance
> > companies, as they are giving you cash now, and want a return on their
> > investment later (whether it is in the form of the property itself, or
> > the original payment + lots of interest).
> >
> > There are other methods to 'fine tune' these arrangements, especially
> > if they have an eye to minimizing their Inheritance Tax liabilites.
> >
> >
> > Maybe you need to elaborate a little....

What I guess I was trying to get at is: Do your family have other
assets, other than their main property, that they could pass onto you
now, rather than at a future date - i.e. cash deposits or investments
that are liquid and easily realised.

Extracting 'equity' from a property can be a convoluted process - i.e.
valuations, surveys, legal fees still come into play. It is a bit like
a remortgage - although you don't have to repay until later - but
because the lender could wait a long time before they see anything
back, you can bet that:

a) The interest rate they charge is higher than normal
b) They will only lend a percentage of the value of the property
anyway, based on the occupants age. If your parents-in-law are aged
over 80, they will lend more than, if they were, say in their 60's.
>>From memory, the maximum figure they will lend is c.45% of the property
value....

So, although you don't want to waste money moving now, there is
probably quite a lot of costs involved in doing this. Who will bear
these costs ?

And also factor in whether your parents-in-law are in good health - if
they live for another 25-30 years, the outstanding debt+interest could
be collossal (see make sure any deal you go into means your
parent-in-laws estate are never liable for more than the value of the
property, full stop)....


I would say, if there is an easier way do it, don't go down this route
- or else, ask someone to recommend a decent IFA or Mortgage Broker who
knows that they are talking about, and discuss this in greater
depth....

Rgds
SS

.

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