Hello,
Who pays the incidental purchase costs with the parents-in-law?
And will you get the high loan?
Why should the parents waive €150,000?
The incidental purchase costs are already included in the 500K, the apartment costs 450K.
We would get a loan, even a higher one. We could also take out 600K, that wouldn’t be a problem.
We just thought about whether there is a possibility to somehow secure the 80K difference for later. My parents-in-law don’t need it now, and we would pay interest on it. The parents-in-law would waive part, not 150K (with a selling price of 650K), but 70K, since there is still 80K outstanding debt on the house.
They would just be helping us. If we had found another house, we would also have received a financial contribution. They are just aware of the market here.
You can do that. But the property is currently being sold, why should the parents benefit from value increases? Your debts do not decrease because of that.
That’s a point. The alternative is to sell completely now; then they wouldn’t benefit from any increase in value either. We thought about capping the amount that would still be outstanding. So fixing this now.
The problem for me would be:
House now worth 600k.
You sell in 10 years:
House worth 800k (with 3% appreciation)
What happens to these 200k??
So I would do it like this:
Pay 520k
Take 80k as a formal loan from the parents. Then you can see over the years whether they need it back or how much.
If your husband has siblings, it should be fair to them as well.
And if you look for something new in 10 years, 800k helps you much more than 600k because all other properties will likely rise similarly to your house.
We would then share the increase in value (minus renovation costs). For that, we would cap the amount.
The house is in the Rhein-Neckar district, but I think at some point even the outrageous prices will no longer rise. But who knows.
I actually always find ideas like private loans between children and parents quite charming and many don’t realize that something like that is possible.
However, the active age of the parents should be considered here – especially or precisely because they are "downsizing," still working, I would assume that they still or even more so have wishes where money plays a role (travel, motorhome, car), or especially the mental aspect of retirement provision plays a big role (early retirement, what can one afford?).
As a "child," people often forget that needs for security and care that the parents themselves have also play a role. They only bought the house so that they can get something out of it in case of sale that they can enjoy after 60+.
That’s true, of course the parents-in-law still have dreams, that’s why we are also considering how to do it. Everyone should be satisfied.
My parents-in-law also took almost 2 years to understand that the desired apartment they want is not available for 200K. If you are not looking for a house, you don’t really notice the price developments. I will inform myself about the possibility of a private loan.
So the parents currently have nothing to give away, which is absolutely understandable.
This 80k was created more or less arbitrarily by a "reference value," it could also be 20-40-60-80 more or less?
Question: Are there siblings? That has already been asked.
Something similar, but only similar, we had with us earlier; unfortunately, there is no identical textbook case.
What would be clear to me today and one of the things I have retrospectively always been glad about:
Something like this has to be clearly and finally regulated, i.e. if you ever want to sell, then you do so freely and without moral or other obligations. Otherwise, the issue is always burdened with wishes or expectations from both sides.
They could sell it now in the best possible way and give you money from this revenue if they want (lend or give), sometimes the idea of a life annuity (please involve a notary) is also an idea, it gives security. An internal loan contract/promissory note can also be done, but that only works well as long as life is fine; what to do if someone needs their money quickly.
I notice I don’t like such convoluted or interwoven solutions.
Now moving into a house that only fits you halfway, that maybe will soon be sold again (high incidental costs) and then possibly sharing a profit again .... never, such dependency solutions often lead to family dramas... 60:40 or 50:50 for 80k is probably the smallest problem there.
You are not really free in your decision; that wouldn’t be an option for me, no matter how good the relationship with the parents is, I think it’s not good for either side because both sides rightfully still have plans for their life.
I would tell my parents to sell their house in the best possible way, and if they have something afterward that they can give me, they should tell me, and only then would I start with my concrete planning.
Or they should tell me a price for how they would sell me their house, without subsequent fuss, and then I decide whether it is interesting to me or not.
I can understand both sides. Everyone thinks about their life, and that’s a good thing. Therefore, it should, in my opinion, be clearly separated.
Sort of yes, the 80K is the remaining debt still on the house now. So with 600K (500K apartment, 20K kitchen, 80K remaining debt) everything would be capped. I suspect they could sell it for 650K on the open market, but we only know that if we really put it up for sale. Before that, it’s all just estimates.
Yes, there is also a brother. I will write something about that below.
But you are assuming an increase in value – which may not happen. I personally wouldn’t calculate with that.
If personal income allows it, I would finance the realistic price now and also pay the parents-in-law. They could then invest the money according to their own ideas etc., and later in case of inheritance or divorce or sale, it is easier to settle the property cleanly. I have simply seen too many disputes about money transactions in families and am rather cautious about that.
Yes, that was the first thought as well, but then we would pay interest on money that is simply not currently needed.
But you are assuming an increase in value – which may not happen. I personally wouldn’t calculate with that.
If personal income allows it, I would finance the realistic price now and also pay the parents-in-law. They could then invest the money according to their own ideas etc., and later in case of inheritance or divorce or sale, it is easier to settle the property cleanly. I have simply seen too many disputes about money transactions in families and am rather cautious about that.
That’s true; the increase in value is of course a risk, so we wanted to create a gap between the purchase price we pay and the possible market sale price to cover that.
Thank you for all your opinions.
There is also a brother. We had thought about getting the house appraised (through whom is best?).
Either we finance it completely or only the 520K, and the remaining value then has to be settled.
If it stays with the 80K difference, we had thought about recording in the will that the brother would later inherit that share more. The will has to be adjusted anyway after the apartment purchase. After years of house searching, we are now at a point where we are ready to make compromises that we definitely would not have agreed to at the beginning of our search.
The house does not fit in the sense that it has no garden but only a large terrace. Equipment, renovation status, location are perfect.