r/AusFinance • u/[deleted] • 9h ago
Parents in law wants us to take over their mortgage once they have retired Debt
[deleted]
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u/hdhdndn3676throwaway 8h ago
So much to unpack here. To put it in plain English, your in-laws just bought a place they can’t afford, they bought it anyways due to their emotions of liking the place. And they are now using “this will eventually be yours (only your wife will be entitle) as an excuse to force you and wife to take responsible of their irrational purchase. And to top it up, they want you to fund their retirement for free once they can no longer afford the place/ that’s when you & your wife will have to move in.
I ll say your in laws have pretty bad intention that’s why these stuff doesn’t sound right, but you can pinpoint why - since they covered an illogic event (irrational purchase + getting op to pay for it) with a logical excuse (eventually will be yours when they die)
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u/Ieatclowns 6h ago
And if they both get dementia or something, they will have to go into a home and the house will have to pay for that
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u/Packetlosswarrior 3h ago
Thanks man! In a way you were right with their intentions. They plan to fully pay it using money from properties being sold overseas. So they can actually afford it.
But i guess the illogical part for me is that they want to get the money back by us paying them the original price. And covered it up with their excuse that they are helping us by not asking for a deposit and only paying the original price even the house went up in value.
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u/SentimentalityApp 3h ago
Yeah this is some real BS.
Why would you pay them for their house without owning it?
It will be paid off.
Is FIL just looking for a retirement income stream?
Because it sounds like he is essentially telling you that he wants you to pay him for the house whilst he still lives there AND you look after him.•
u/great_extension 1h ago
Say yes, let them sign it over, and then sell it immediately. She's guarantor, and you'll be paying the mortgage, so it's yours. If they don't want it, they can live in one of their other houses.
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u/Intelli_gent_0601 1h ago
That will come with a stamp duty cost to have the property signed over to them. It seems as though she’s a borrowing guarantor, not on the title of the property. So assume it’s worth $1.5 million, that’s about $65k stamp duty plus the agents and legal fees to be able to “sell” it once it’s transferred..
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u/great_extension 1h ago
Still gets it off the books, and just consider the stamp a tax to sell it.
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u/Intelli_gent_0601 1h ago
Yeah, nice idea in theory. Where do you think the $70k is coming from to enable that? It’s def not from the parents…
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u/LankyAd9481 1h ago
Thanks man! In a way you were right with their intentions. They plan to fully pay it using money from properties being sold overseas. So they can actually afford it.
how? if that were accurate, there's no longer a mortgage to take over, so how can anyone take over the mortgage?
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u/elad04 1h ago
All sorts of red flags here. So they have the money to pay off the house tied up in other properties??
They need to sell those properties and pay out the loan to free you wife from this debt. They are holding her back, and her future with you back.
The ONLY area this could make any sense in is if you both wanted to live with the FIL and they were giving the property to you in terms of buying out the remaining of the loan(so below market value). But even then, there’s a lot of complexities.
If there’s no interesting living with FIL, then this loan needs to be paid out asap, either through selling other properties or downsizing - do not let this drag on, you will regret it.
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u/leopard_eater 7h ago
In simple terms - your parents in law have just bought a house and now the repayments will be forced onto you because their plan is to stop paying and your wife will become financially responsible when that happens. This also means:
You both won’t be able to get a mortgage for yourselves
You have no legal rights to the parents in laws property and they can sell it on the market any time they like
Your wife has saddled the pair of you to at least the next thirty years of debt.
Get a solicitor. Now.
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u/Packetlosswarrior 3h ago
Sorry my bad. Forgot to add the part where they plan to pay it full using funds from overseas from properties that they are trying to sell. But as you pointed out, you are right we wont be able to get our own house until they done paying it.
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u/threeminutemonta 3h ago
“Do sell or do. There is no try”.
Seriously they need to try harder pay it off so that you and your wife are no longer guarantors.
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u/Merlins_Bread 2h ago
On the plus side, the guarantee will only apply after the bank has cleaned out all the parents' other accessible assets. (Basically they and OP's wife would be joined to the action to enforce the debt.) On the downside it seems their plan is to hide said assets overseas - which would force OP's wife to sue them. This could get exceedingly nasty indeed.
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u/leopard_eater 2h ago
All these ‘plans’ that they have are not in writing and don’t form part of a contract of agreement between them and your wife. They can simply do none of these things, and your wife is on the hook for the lot.
Time for a solicitor. Filial piety isn’t a thing in Australia, no matter what cultural expectations your parents in law might have.
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u/fapking22 8h ago
This is a bad deal that only benefits your in laws.
I can understand your wife being the guarantor, but the only legitimate way that this would work is if the in laws sell you the house and you allow them to live in it and pay rent using the funds earned from the sale of the house. If you let them live in it rent free, not only do they pocket the difference between the sale price and original purchase price (also taking into account the growth in equity), but they are essentially saying that they would like to live in the house rent free. And from the way your post is written, this is almost certainly going to happen. If culturally, it is expected that you take care of your in laws in their old age and live a miserable life yourself, then the arrangement is fine.
The only other action to take would be to discuss with the bank and organise the house to be transferred to you and your wifes names as guarantor as your parents are no longer able to service the loan. There is probably a tax benefit here.
The way that you have described this sounds like an under the table arrangement, whereby nothing is documented or titled in your name, and you will simply give the money to your in laws or pay on their behalf. What happens if you get divorced, or they decide to sell the house later, or give it to somebody else when they pass away?
Regardless of what you decide, you will 100% be unable to apply for or maintain another loan. Is your plan to buy your own place, or rent separately until your in laws need you or pass away and then move into the house? Is it guaranteed that you would need to move in and live with them to take care of them when they are old, or is this an assumption? Is the timing imminent? Many people try the live in route and then end up putting their parents in a nursing home because of the mental stress. You might find a job in another city or country, or life may have other plans.
Another more valid option is to buy your own place, have your in laws sell their place and then have them move in with you when required. This way you get to live your life on your terms, remain in control (legally) of your assets and fulfil your cultural obligations. It will also relieve pressure and allow you to have kids in the future if planned and manage your finances accordingly. Your in laws can use the funds from the sale of the house as retirement money.
Quite frankly, your in laws have spent above their means and this shouldn't be made your problem.
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u/Packetlosswarrior 4h ago
Thanks for for your input on this.
The good news is they have properties overseas which they will be able to sell + high income which should full pay the house before FIL retires. As of the moment they were able to pay half of the total amount of the house already.
The only remaining issue i wanted to be clear was the part where we repay them for the house, it sounds like we are buying it off them without any deposit (i think thats what they think i their head why they think it is a good deal for us). And that has already been answered by si many of yous.
And i got the point from other people in this sub, we could always just wait for them to be you know - un alive and we get it anyway.
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u/fapking22 3h ago
No stress. It's never a good idea to mix family with money. I hope that it works out for you.
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u/SentimentalityApp 3h ago
Let's be honest, you aren't getting the house until they die anyway.
Do you think if you won the lottery and tomorrow and paid them the full amount they would give you ownership and you could kick them out of your new home?
Or do you think nothing would change?•
u/Intelli_gent_0601 1h ago
There’s no need for you to do that. There are first home owner grants in nearly all the states in the country where the government will give you stamp duty concessions and/or a deposit for the new home you are purchasing. There are also schemes where you can borrow up to 95% of the purchase price with no mortgage insurance, pretty much allowing you to go in with little to no deposit in any event.
You need to check the rules in your state. But the deposit part of the grant is usually for new properties only, not existing ones. Stamp duty savings apply to new and existing houses.
Given these schemes exist, taking on a house with no deposit really isn’t that big a help to you if it’s not where you want to live for the next 10+ years.
A few things to think about..
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u/Impressive-Style5889 9h ago
It's a bad deal for you specifically.
What happens if you divorce before they're dead?
It'll be a pain in the arse to litigate to have your share of the house returned as it'll be in your inlaws name.
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u/Packetlosswarrior 9h ago
Well i hope it doesnt cone to that. But say we live in a perfect world where we wont get divorced,hypothetically. What are the cons of this set up?
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u/mangoes12 5h ago
Basically they are making you buy their house off them, but it’s still legally treated as their house, and you have to pay repayments at double the amount you would if you bought your own house and then act as their live-in carers?
It’s a terrible deal, I can’t really see any pros to it except if the house has gone up a lot in value but you only have to pay what they paid for it.
Also it’s odd that your father in law seems to have come up with this arrangement without consulting either of you?
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u/redaok 4h ago
Without a contract the whole “what they paid for it part” seems something that could be easily forgotten/reimagined as well.
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u/Packetlosswarrior 4h ago
Yup from how i know FIL this will likely to happen.
Based on what other people have already pointed out, i think we can just wait for them to finish paying and not move there or pay them anything.
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u/Packetlosswarrior 4h ago
I know it sucks to be live in home carers, unfortunately its a cultural aspect and it is expected to be that way.
Yeah, i think thats why they think it is a good deal for us, but as some people had already pointed out, this can all be reimagined as not any of this is in writing.
It was a sneaky move that uses toxic culture elements to get my wife into this. Anyway the good news is they can actually repay it given the amount of salary FIL get plus properties overseas that are being sold. I believe they already paid half the full price of the house when the cinstruction started and they havent used funds from properties overseas.
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u/hdhdndn3676throwaway 8h ago
Get your in laws and your wife to sign a contract to agree that you will also be entitle to thr property once the in laws pass away. That why you can protect your downside, there is no “hope” , everything should be in a legal doc
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u/Packetlosswarrior 4h ago
Thank you! Will do this
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u/Harambo_No5 2h ago
Don’t worry about the contract, just don’t go anywhere near this ‘deal’.
Sounds like you’ll be stuck caring for your manipulative FIL for decades, while you pay for his care.
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u/rangebob 4h ago
If my wife made major financial decisions without my input. She wouldn't be my wife. Jesus
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u/Oh_FFS_1602 2h ago
Aside from the forced unpaid labour, you’re being pressured into buying a house you (and your wife from the sounds of it) wouldn’t have chosen for yourselves.
Stamp duty needs to be paid on market value for the title transfer, and I would definitely want the title transferred if they are expecting you to hand over money into a mortgage and to them for the difference in original purchase price (don’t pay them and have them still the legal owners of the property, that’s jot in your best interests).
If it’s a cultural expectation that you (or your wife more so, but presuming you’re a package deal) will live with them, why is taking over the property formally a requirement? They have the means to payout the mortgage and cleanly own it. Even if you were to live there, share bills but not pay rent (due to unpaid labour/care that will inevitably be provided), that could be mutually beneficial to some degree with less of a power imbalance. It would also mean you and your wife could buy somewhere else and rent it out so you still have a property to go to if this is t the house you would choose for yourselves, or at least be “in the market” so that later on you could sell and buy where you would choose to live (or rent vest)
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u/Agreeable_Fig9224 6h ago
Did your wife seriously just sign as a guarantor for someone else’s mortgage without discussing things with you??? You glossed over this bit but do you realise what the implications of this are?
Forget the deal FIL is offering. Its absolutely for his benefit and a bad deal for you in every which way you can think of.
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u/Acceptable_Tap7479 3h ago
Wife is happy to be guarantor but doesn’t want this deal makes it obvious she doesn’t understand what being guarantor means. She’s legally responsible regardless
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u/Illustrious-Neck955 9h ago
She'll get it when he dies anyway, this is a weird set up. Will you be living there while he's alive? Has he just demanded this? Is there a cultural element at play?
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u/Packetlosswarrior 9h ago
Agree with the weirdness. Definetely have cultural element at play. If we do end up taking the house they will still be living there. So i assume when they get pretty old and cant take care of themselves is when they expect us to move in. To make things even weirder, they told us before if we move with them, we wont have to pay rent so we can save up to buy our own house. But they still expect us to pay they mortgage when they retire and live there
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u/raspberryfriand 8h ago
This might sound cynical but they are roping you/wife to be both the primary caretaker and financier when they retire so they can continue with their loves without the ongoing responsibility nor be sent to aged care facilities (which some are deathly afraid of).
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u/Packetlosswarrior 3h ago
I feel like you might be right on the money on this one. They are so afraid of that fact - being sent to aged care. It is culturally expected to have us take care of our parents so thats what they expect us to do. And thinks of us paying them the original price of the house without any deposit is a good thing. But by the time we pay it completely, they probbably gone by that time lol - which as the other guy has already pointed out "we gonna get it anyway"
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u/ArcherTea 2h ago
Hey OP, Not to scare you, but to be real with you from personal experience, sometimes aged care is inevitable and the best place for someone with complex medical needs.
If FIL needs this care you may have to sell the house to find the care (especially if legal ownership is still in FIL’s name and will be assessed by the government as his asset). Aged care is expensive, but sometimes it’s the best place for someone to be. My relative had a fall and the hospital wouldn’t discharge him to his home as we had no one qualified to care for him, so again, aged care was inevitable but to be honest with you it was the best thing for him. He had dementia and diabetes, and even another relative lived in the house she couldn’t care for his complex medical needs so the family ended up having to sell the home for his care.
Your situation sounds risky and you need to think about what you’ll do when FIL is 80+ years old. Might be worth looking at how the government assesses the fees for aged care (link: aged care home costs and fees) and show your wife that your FIL may need those funds himself when he ages. Don’t assume that you can care for him until the end and don’t assume that you can afford to fund his care yourself.
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u/Packetlosswarrior 2h ago
Im already scared as it is but thanks for the heads up. This is another thing we have no idea of
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u/blankcanvas445 7h ago
You’ll not be able to save up for your own house if you’re paying their mortgage. And if you’re paying their mortgage, you should get your names on the deed so that legally you own a portion of the house. Think you should ask this question in r/auslegal too
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u/_Mundog_ 4h ago
This is basically a scam, disguised as "family obligations". Honestly, this will likely destroy you financially and your marriage.
As payments impede your ability to save for another property and they eventually become so old your wife feels compelled to move in with them into THEIR home, you will resent her and them. And they will likely live 20-30 years beyond when they retire.
Your wife went guarantor on a loan it sounds like without your knowledge. This means she is responsible for that mortgage, without the benefit of actually owning the house or any claim over it. This is all massive red flags.
Unfortunately many "cultures" suggest that parents can ruin their children's (and respective partner's) lives so they can get ahead and be comfortable. Run.
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u/Langist11 1h ago
You've said in other comments that they are selling their overseas properties and can afford to pay the house of. But here you're saying you'll take over their mortgage once they retire? If they've said this it sounds like they know they can't pay it all of even after selling there other houses or they're lieing to you about selling there other houses.
Plus if you did pay their mortgage once you've moved its literally just like paying rent. Paying there mortgage is just like paying the inlaws rent while they get to pay of there house and live there rent free.
Depending on how much the mortgage is, you could easily be paying way more than what renting a place would be.
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u/mattkenny 8h ago
You ask if you are better off saving up to get your own house. But it sounds like your wife has already signed the paperwork to be a guarantor for her parents mortgage, so as far as any lender is concerned, she's on the hook for a mortgage already and unlikely to lend her for a second one. I.e. you've got yourselves into a real shit situation by the sounds of it. And that's before the whole situation of them expecting you to buy the house off them when they decided they don't want to keep paying.
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u/blankcanvas445 7h ago
There is no good deal here and while you’re tied to this house (if FIL stops paying mortgage your wife is legally obliged to), you’ll not be able to buy a house of your own (unless you’re super rich). Going guarantor for a loan is no small thing! In the banks eyes, your wife has a mortgage already. But no house.
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u/in_and_out_burger 6h ago
Since your wife is the guarantor she’s on the hook regardless. What is even messier is if there are additional siblings who could inherit.
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u/atropicalstorm 4h ago
It’s not just “her name being used to get the loan”. The guarantor is liable for the mortgage - ie if they stop paying it, your wife is on the hook.
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u/Sufficient_Tower_366 4h ago
He decided that at some point when he retires, we will take over how much left was remaining of the mortgage and paying them the total amount they paid when they originally bought the house in installment(we probably have to pay them pretty much rent + mortgage to bank if we do decide to take over).
Your FiL expects that when he retires you will take over the remaining mortgage repayments and buy the house off him for the price he paid (presumably less the value of the outstanding mortgage). Is he expecting to remain living in the house while you pay it off? I don’t see how this works out in anyone’s favour but his, you will be paying a mortgage, plus repayments to him but will be sharing the house with them. This is one hell of a strange arrangement and I wouldn’t go anywhere near it. Your FiL should sell and downsize when he retires like most people do.
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u/JGatward 3h ago edited 3h ago
Wait a minute. So a conversation was never had with you about this beforehand? Like you have never heard about this untill now? You're both being used it would seem (may be wrong)
Ummm I would consult a lawyer or something or maybe someone who can give some really good advice on what to do next, this isn't stuff you muck around or play with for fun, these things have implications that come attached with them and hey maybe that's ok, but yea I'd be consulting with a number of others in the field and getting a few opinions so the decision.
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u/Flat_General_7789 3h ago
I know others have explained the situation you’re in.
But you keep saying two confusing things 1. You FIL wants to stop making mortgage repayments once he retires and you and your wife will take them over. 2. Your FIL plans on paying off the house in full with funds from property overseas.
So which is it?
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u/Packetlosswarrior 2h ago
I am as confused as you are. He keeps bouncing off the two things you pointed out everytime i ask him
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u/Flat_General_7789 2h ago
You and your wife really need to sit down together and discuss what you want.
Is she secretly expecting that this is what will be done? Or is it all your FIL
Better to find out now, before you have kids etc.
Once you and your wife have a clear picture of what you want. You need to sit down with your FIL and tell him what you will or won’t be doing.
If he plans to have the house fully paid off, he can sell it and recoup his money, rather than you and your wife paying him back for a house you don’t want?
Time to have some hard conversations and get to the bottom of this.
But as others have said your wife being guarantor on the loan is going to hurt you two until the house is paid off!
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u/Gibbo023 5h ago
Your wife is on the hook regardless going guarantor.
Hiw old are the parents and do you guys have your own house?
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u/ApacheCat99 4h ago
If you did it you would need to have a mortgage on the property in both your names. For example what happens if after 5 years of doing this the relationship between the dad and your wife breaks down and he decides to change his will to give everything to the guide dog association or something. It also provides protection to you if your marriage breaks down for any reason.
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u/Packetlosswarrior 2h ago
Thats one big ass dog house lol. Jokes aside yup i got a better view of what situation we are in now. Thank you guys!
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u/fuck_you_thats_who 2h ago
If he hasn't paid off the house by the time he retires he needs to sell the house and downsize.
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u/Dry_Sundae7664 1h ago
Hang on a minute.. how is your wife guarantor without a property of her own? A bank wouldn’t accept a guarantor without any assets?
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u/hashkent 3h ago
It’s a bad deal, depending on when they bought it, there should be equity and you can remove the guarantee interest. Your wife might be able to ask the bank directly.
For the other things I think your signing up for a difficult life, this won’t work with kids, work and being an independent family.
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u/intergalatic-queen 2h ago
also another thing to consider - if the plan is to take over the mortgage once he retires, what happens when your wife has to stop working to look after her parents full time? hopefully they age well and that never has to happen, but it’s also something to consider.
I see it all too often in my line of work and the stress is unreal on the children who have to/feel obligated to take care of their parents because of cultural reasons.
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u/Profession_Mobile 2h ago
Get him to transfer the house in your name for $1 then take over the loan and make him pay a small portion of rent and have a proper rental agreement in place
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u/Two_Pickachu_One_Cup 2h ago
The only circumstance where this is ever ok is if the parents in law transfer the property to your name and your wife's name making you legal owners. That way at least if the parents kark it its legally yours.
In all other circumstances why an earth would you pay someone else's mortgage?
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u/shell_spawner 1h ago
Honestly, if you still need a guarantor at their age, they have clearly not made sound financial decisions in the past and this sounds like another one. This has got red flags all over it, you and your wife will be tied up in this house and limited to what you can do with regards to your own finances and property purchases. If enough equity builds up on the property it could be possible to refinance and then remove your wife from guarantor but obviously will take a decent amount of time given market cycles.
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u/Shampayne__ 2h ago
What type of guarantee did your wife sign? There is two main types - one where she’s only guaranteed a portion of the loan (ie a 20% shortfall in borrowing capacity) or a more general one. The latter would be concerning. This means that if your in laws stop paying this loan or become unable too.. your wife is liable. For the entire amount.
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u/Minimum-Pangolin-487 2h ago
I can’t think of anything worse. Imagine being stuck in a house that you have to pay for now, and spend your hard earned money on only to be left living with a FIL and a house you might not desire or want. Disaster. Have the conversation to your wife about it, and that you might want to live elsewhere.
Did you get married knowing that you’d be living with your FIL?
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u/The-truth-hurts1 2h ago
Your best bet is to buy him out of the house when he retires.. put everything into your name
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u/Langist11 2h ago
Why didn't they just sell their properties first before buying a house if they already think they can afford it with the sale funds? Just seems sus to me.
I know you said it not a culture thing but what culture is your partner from? Is it part of her culture to look after parents usually?
Just sounds like the inlaws are setting you up to be there care takers while they sell the house to you and live in it after you've taken possession when the time comes, with free care and rent.
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u/BetterDrinkMy0wnPiss 2h ago
in terms of paying it off i dont think he will have any issues as he is earning enough.
Then why does he need you to take over the mortgage? He has no plans to pay it off, hence why he wants you to finish paying it off for him.
But since he decided without really taking my wife's opinion, my wife did not really like this idea and no interest in being any part of this arrangement.
The fact that he got himself and your wife into a 30 year commitment without asking for her opinion says it all...
She is okay with her name being used to get the loan tho.
She shouldn't be. Being guarantor means she's liable for the mortgage if he fails to pay for it. It will also negatively affect her borrowing power when you and her try to buy a house.
are we actually being offered a good deal with this situation?
Do you actually want the house? Do you want to live in it with him after he retires? Do you want to effectively become live-in carers for him as he gets old?
Financially it might be a good deal, depending on how much is left on the mortgage when he retires and how much the house is worth at the time. But it doesn't sound like it's going to work out in your favour overall.
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u/lowmilk_ 1h ago
How long has he had the mortgage for? Is it possible the house has appreciated in value? If so, is the value the same as the amount that was guaranteed by your wife?
if what you and your wife want is to be off the loan, your FIL can fill out paperwork to release your wife as a guarantor. The bank will then do a valuation to make sure the house has appreciated and/or your FIL has paid the same value as what your wife is guaranteeing. That way, she won't be legally liable for the house if your FIL defaults. I'm assuming she has property that was used to guarantor with? It sounds like it is a bad idea as FIL seems to be trapping you both, and you shouldn't have to pay him back for the mortgage he's paying while living in the house. Worst case scenario, if FIL defaults on his loan and you can't pay his mortgage, your wife will lose her house (used for the guarantee) to pay off FIL's mortgage because it's tied to FIL's loan.
Out of curiosity, was your wife somehow coerced by FIL to be a guarantor? I'm not sure what the bank will do if they found out if she was, but i thought i read something somewhere about not being eligible to be a guarantor if you were coerced into it.
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u/Knee_Jerk_Sydney 1h ago
Did you know about this arrangement before you got married? If it is cultural, things are not looking good. Fighting this will cause friction that may ruin your marriage. Parents in law obviously want to have some security at best and at worsts, continue to be in control. It's nothing you wouldn't want yourself.
Think about what you really want and how far you think you can trust your parents in law.
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u/bobdown1234 3h ago
Buy 50% of house from them, hopefully that clears there debt. You benefit as hopefully house values increased since buying.
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u/DasHaifisch 8h ago
Hold on, when did this happen? Did your wife do this while in a relationship with you - WITHOUT consulting you? or was this a pre-existing thing? Huge financial decision and I just wanted to highlight that.
> She is okay with her name being used to get the loan tho.
It's way more than that too - she's now liable for the morttgage if they ever have any issues paying for the property. This will also make it hard for her to borrow money in the future, as banks will assess the property as a liability against her - which can affect your financial plans as a couple.
Without putting any serious thought into it, this sounds like a shit deal, and a possible shitstorm in the making if anything goes wrong now or in the future. Also, where is he going to live when you 'take over' the property? Because it sounds like all your money is going to be tied up in this property while he lives in it and benefits from it. It's not like he's going to just drop dead when he retires - he could live another 20-40 years.