Q & A › Category: Properties › Selling family home to kids: Is it the right move?
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AHMAD LUQMAN BIN MD YUSUF asked 6 years ago

Hi KC
Recently, my parents had the thought of changing the ownership of our family home to me (eldest of six), however as it will involve a number of legal procedures (ma-fan) , they were thinking of selling to me instead and using some of the cash proceeds for themselves and for home renovation.
Background scenario :

  • Parents: Mom 49 years old-Dad 59 years old
  • Me: 24 years old (currently working for 2 years now)
  • A 17-year old family house (their only property)
  • Thought of selling to me and proceed of sale used for personal needs or house renovation (parents too old for bank to approved for a home refinance)
  • Took up bank loan (with MRTA) under Mom’s name and still have outstanding bank loan balance of RM90,000 to date

Question:

  • I watched your 2015 webinar with CF Lieu in regards to MRTA and MRLA and from my understanding, since my mom already took the bank loan with an MRTA attached, would that already secured our home to become a ‘family property’ in the event of an unforeseen circumstances happen to my mom. 
  • If the above is true, would that make selling family house to their kids and having them to take another round set of home loan a bit illogical since the house is already belongs to the family anyway?

Looking forward to your reply 🙂

1 Answers
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KCLau Staff answered 6 years ago

1. MRTA is an insurance that covered the life assured. In your case, your mother is the life assured. Regardless of whether she still own the house, if something happens to her, there will be proceed from the MRTA. Unless she cancels the policy.

2. Basically, in your case, your parents are thinking of having you taking the loan by refinancing. And they can cash out the equity from the property – the cash to renovate the home and continue to enjoy the property. Meanwhile, you will be responsible for the new liability.

I can’t comment whether this is the right thing to do as it is your family matter.
Questions you want to ask yourself:
Do you want to take up extra liability to fund your parent’s retirement?