My friend wants to buy her mother's house but hasn't enough money

O

onekeano

Registered User
Messages
910
A friend lived with her mother until she died recently. The mother had done an equity release a few years ago to provide some funds for my friend and her sister. The outstanding amount at this stage is 125k and the value of the property is 230k.

My friend works on a contract basis an earns about 25k p.a., her sister who is married works part time so getting a mortgage could be a major problem. As I see it my friend would have to come up with c.175k to be able to stay in the family home (230-125=105 in equity), so just over 50k each.

My friend does have savings of c.€80k in addition to equity in the family home but they are at their wits end that they may well have to give up a home that while modest has been their home since they were a child.

Any advice / suggestions would be much appreciated. If anyone can suggest options in terms of finance that would be great.

Roy
 
Roy your post is a little confusing.

1 the mortgage is 125k so this is the amount that they need unless I've missed something.
2 is the sister who got €62.5k waiving rights to a share in the house.

€125k - €80k = 45k loan needed. I assume that there is no capital acquisitions tax issue.
 
Sorry Joe, the value is 230k and the amount debt is now 125k leaving 105k in equity or 52.5k each.

Her sister is NOT waiving her rights to her share so my friend would need to need to come up with the value of the house less her equity ie. 230-52.5k - does that make sense?

She has access to around 80k leaving a shortfall of around 90k.

Roy
 
I too am confused, so I will try to set it out in table form

Value of house |€230k
Less mortgage|€125k
Net equity|€105k
Each person's inheritance|€52.5k
|
Cost of redeeming mortgage |€125k
Payment to sister|€52.5k
amount needed|€177.5k
Less deposit|€80k
Total needed|€97.5
Loan from sister|€52.5k
Mortgage required|€45k

Or look at it another way...

outstanding mortgage|€125k
Less cash|€80k
Amount required|€45k

If the two sisters are cooperating, the first sister needs to borrowr €45k which she might well get from a bank.

The married sister does not need a mortgage,so her earnings are not relevant.

Will the married sister wait to be paid her share over time?

In the meantime, the single sister can rent out a room and use the proceeds to pay the mortgage or pay off the sister.

Brendan
 
Hi Brendan - all correct in your table with the exception of the "loan from sister". I don't think that is likely and don't think I suggested that.

However the renting out of a room (or 2) is certainly possible but given that she is a contractor borrowing €97.5k I think will be a major challenge.

Roy
 
Hi Roy

I stuck in the bit about the sister lending the money. Who are "they" in the following sentence?

they are at their wits end that they may well have to give up a home that while modest has been their home since they were a child.
Click to expand...

Is that the singular "they" and you really mean "she"?

Brendan
 
yes I was referring to the singular Brendan, however I should point out that the other sister is not unsympathetic - it's merely a case that her circumstances also mean that she is relying on her inheritance also.

Both sisters are anxious that they do not have a family fallout over whatever the final conclusion is.

Roy
 
Hi Roy

It sounds as if she can't afford to keep the family home unless the other sister defers her inheritance.

Brendan
 
Fair enough Brendan, just wanted to double check that I wasn't overlooking something.

Thx
Roy
 
You must log in or register to reply here.
Back
Top