NSW Reverse Mortgage Issues with Parents' Lawyer

[Commodore]

My parents have a reverse mortgage. My husband & I would like to take out a mortgage to pay it off as it has already doubled in 10 years.

We live with my parents and I have an interest in the property although not noted on their title, my parents want to transfer a 1/3 share to us so that we can do this.

My parents' Lawyer got my parents to have a health check to prove they are of sound mind which went fine but he is treating us like we are going to rip them off. He also said he wanted to see our pre approved mortgage documents but how can you apply for a loan when you are not on title?

This is the reason we went to the Lawyer in the 1st place. Is he giving us the right advice?

We need to borrow more than the Payout figure as we'd need to do improvements to the home as it is over 55 years old and he wants to know exactly want we are going to borrow but as far as I am concerned it is none of his business what we borrow, any advice would be grateful as I need to call him tomorrow and I am not impressed with what he has done so far as it has been nearly 2 months and all that has been done is a private valuation of the property.

 

[Ivy]

Hi Commodore,

Firstly, it is common for prospective house purchasers to seek pre-approval for a mortgage. The normal process for mortgages is to apply for pre-approval, then to make an offer on a property and if that offer is accepted, to exchange contracts. About 6 weeks after contract exchange, settlement occurs. The period between contract exchange and settlement is when the purchaser secures the mortgage.

Secondly, remember that the solicitor has been engaged by your parents and is acting for your parents. This means that they are not concerned with your interest and they will ask you for documents if that will help them to assist their client. If you are unhappy with this process, you should engage a solicitor to represent you.

Seeking legal advice is a good idea anyway. Taking on a mortgage, especially one to pay off another debt, could have large ramifications if you default. It is better to seek legal advice beforehand to make sure that anything you agree to is fair and reasonable.

 

[Older Adviser]

My parents have a reverse mortgage. My husband & I would like to take out a mortgage to pay it off as it has already doubled in 10 years.

We live with my parents and I have an interest in the property although not noted on their title, my parents want to transfer a 1/3 share to us so that we can do this.

My parents' Lawyer got my parents to have a health check to prove they are of sound mind which went fine but he is treating us like we are going to rip them off. He also said he wanted to see our pre approved mortgage documents but how can you apply for a loan when you are not on title?

This is the reason we went to the Lawyer in the 1st place. Is he giving us the right advice?


We need to borrow more than the Payout figure as we'd need to do improvements to the home as it is over 55 years old and he wants to know exactly want we are going to borrow but as far as I am concerned it is none of his business what we borrow, any advice would be grateful as I need to call him tomorrow and I am not impressed with what he has done so far as it has been nearly 2 months and all that has been done is a private valuation of the property.[/QUOTE

I would like to go back to the concept of your parents giving/selling you a third of their house. Have you considered
- What are the implications for aged pension (Sale of property)
- If they need to go to aged care,
- How will this be paid for,
- How will they be assessed for means testing
- As they will have 2/3 equity in their home, how will a lump sum be paid, if that is needed.

Really think you need to think more than just taking a share in your parents home