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dangermaus

buying in-laws a house

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My wife and I moved abroad 3 years ago

Her parents have an interest only mortgage in the UK which is coming to term in the next few years, and no idea of how they can afford or get repayment mortgage.

As a solution, I proposed buying the house for what they paid (£125k) 20 years ago, and renting it to them at what their mortgage currently costs. I'd be getting a 3% or so return which isn't fantastic but I'd get a house at approximately 50% of its current market "value" and tenants who would look after the house as if it is their own for the rest of their lives (they're around 60)

Firstly, is the above a ridiculous idea? It seems fair to me, and after a little explaining to them they realised it's the best alternative to losing the house, and that they're not really losing 125k in equity since they don't actually own the house anyway, and they don't really have any other options besides massively downgrading, and where they live 125k would take them far away from our nieces and nephews and probably get them a small flat compared to the 3 bed house in the same road they currently have.

Secondly, can my wifes student loans cause any problems for us owning a property in the UK? We'd be buying the house outright, and it's our first property purchase (we're both 30) she has approx one years worth of loans which may be classed as defaulted since we've ignored it since leaving the UK.

Do we need to repay the student loan before we think about buying a property in the UK or is it not relevant since it's only based on income?

Thanks for your help!

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3 hours ago, dangermaus said:

Firstly, is the above a ridiculous idea? It seems fair to me, and after a little explaining to them they realised it's the best alternative to losing the house, and that they're not

Some things that sprung to my mind:

Are you giving them a 3% fixed rate until they both die, while interest rates are at an all time low or is it variable rate?

If the money is invested there is your opportunity cost to consider?

If the money isn't invested and just in the bank, if rates go up but their's is fixed it costs you more

Will you be paying income tax on the rental income until they both die?

125k seems a bargain but what if prices fell?

What if they don't look after the house and stop paying you rent?

What if you and the wife split? (see above point) She moves in and gets the house?

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