Buying a house for parents

[TheNiceHatMan]

Hi all, newbie here.

I would like to help my parents buy their own home. At the moment they live in council housing, at a rent of £500pm.

They would like a house with a garden etc and if I'm in a position to help out I would like to start paying back some of the support they've given me over the years.

I've found a house which would be perfect for them, at a cost of £140,000. They are prepared to put their savings into the deposit and I would top it up to £14,000. Their contribution would be £10k, mine £4k.

The mortgage payments plus the usual extras would come to £800pm in my view. I intend them to continue at their rent of £500pm, and put the extra £300pm in myself. (A 37.5% contribution to the monthly payment).

Does this sound sensible? The plan is that they can live in the house for as long as the require, ultimately I might be left with a house of worth £140k plus inflation for a 30 year mortgage of £300pm and £4k down or if they sell early then 37.5% of the selling price.

[nktokyo]

Are you the only child?

I've heard of one child supporting the parents and getting the lion's share of any assets when they pass away. It's sort of like a loan to be repaid out of the estate. If you're supporting them then my guess is you're not inline for a large inheritance but either way I would square this away with any brothers or sisters you might have so nobody is surprised later.

[totoro]

It sounds very reasonable for emotional reasons. 

It doesn't sound like a good financial investment (if that is what you are asking?) as you are cash flow negative 300 pounds a month.  What is the market value of this place if rented out?

Sorry to bring it up, but is 500 pounds a month still affordable if one of them passes away?  Also, will it be in their name or yours?  If yours, are there tax deductions for the net loss loss?

[b20015]

Logically, you'll want your name on the deed. Makes it wonky with them putting more on the down payment, but it makes it so if you do have siblings, there isn't any murky-area where it belonged to your parents and they should get a piece, etc, etc.

Even if you don't have siblings, it would avoid the property transfers and just be simpler at the end. And totoro mentioned tax deductions as well! Might be worth a thought or two.