Would you accept help from a relative?

QTPie

kunekune wrote: »

Thanks for the kind support, I'm not used to getting help, my family has never given any (and never will), so it's not an attitude I've grown up used to.

If you are both happy with it, then ccept it graciously.

It very much depends on the situation of your in-laws, but if they are financially secure, then this makes perfect sense...

Parents always want to make life better for their kids, even when they grow-up.

Good luck
QT

kunekune

Interestingly, one of the reasons we want the bigger house, is that our son (now 9) has an intellectual disability and it is likely he will continue living with us into his 20s. University students don't really leave home any more either. So, I suppose, we're thinking about our own children and what will make it pleasant for us to all carry on living together as they get older. Part of the same way of thinking, perhaps.

silvercar

kunekune wrote: »

Silvercar, if we paid 185K, the mortgage would be 12K less than if we bout for 170K and didn't have the help, which means that the entire mortgage would be at 1%, so the monthly savings would be the interest at 4.5% (now 4%?) on 12K.

Thanks for the kind support, I'm not used to getting help, my family has never given any (and never will), so it's not an attitude I've grown up used to.

My father always says that you should take people as they are. If they can afford and wish to help you out then you should have no qualms about accepting.

Families are all different. The good ones give time or money or emotional support or some combination of all three; don't be guilty about accepting whatever is offered in the spirit it is given.

Imp

My wife and I were recently offered help from both sides of the family towards our first house purchase. We refused, but said that if they want to help, to put £5,000 into a savings account (in their name) on the understanding that if something went badly wrong (boiler blows up, car written off etc. ) the we have something to fall back on and we can use that money. Otherwise, we would have had a similar sized savings pot of our own, and a smaller deposit/less money for doing up the house or buying furniture.

bryanb

Sorry, I haven't read every post, so ignore if already covered. Does your mortgage rate depend on OH working at the bank? Would it continue if his condition forced him to leave his job?

Debt_Free_Chick

kunekune wrote: »

We have been househunting more seriously since interest rates came down - as we are able to get a good mortgage deal at base rate, we've taken the approach that if we find the right house at a good price, it's worth taking the plunge.

Are you sure you can get a mortgage at "base rate"? Do you mean the SVR which is around 3-4% depending on the lender?

Whatever, have you factored in the repayments should the SVR rise to 5% which is a more realistic medium term (3 years?) view?

What does your budget look like then?

So far, we have treated our maximum offer as 175K. That's because the mortgage that would involve is one we can afford at standard mortgage rates, on one income, and without making any real cutbacks to living standards. We're being cautious because OH has a progressive medical condition and we don't know how long he will be able to work (especially as he is with a bank). However, my FIL has now offered us some additional money.

Ignoring FIL's offer for now, have you looked at what your budget would be like with mortgage interest rates at 5%? or even 10%? What about other increases in the cost of living, bearing in mind that we've seen wild increases in food and fuel in the past 12-18 months?

On the one hand, I am reluctant to take help from the parental generation. We're grown ups and managing. Also, if we had behaved more sensibly in the past, we would be much more financially secure now, so it is kind of our own fault. We're putting it right, but I feel some pride in that, and taking help might dent our pride. On the other hand, this is the kind of help that is an 'advance' on what will come in the future, but at a time when it could make quite a difference. If we say yes, we can increase our maximum offer by about 10K and also reduce the amount we borrow - since that would mean it was all at the specially low rate, that would mean another £200 a month in overpayments for so long as OH is working. The overpayments are a safety net in that (a) they improve our LTR ahead of any need to refinance and (b) when that refinance occurs, we owe as little as possible.

Presumably £200 on the current mortgage interest rate. What would interest rates need to rise to wipe that out?

The other aspect to this is that the house we really want - the one that will see us through to retirement, in all likelihood, even if the children never leave - is currently above our max price, but wouldn't be with the extra money. It would also be big enough for FIL to visit in comfort!!! We'd still have to negotiate hard to get the house at a fair price, but at least we'd be in with a fighting chance ... and psychologically, I think that showing we'll go over the stamp duty figure shows that we are serious.

Could you get a mortgage at the max price you're considering?

Wouldn't it be better to "start small" and look to trade up at a later date? Trading down when your circumstances have changed is never a good idea, as you're essentially in to a "forced sale" situation and unlikely to realise the full equity you've built up.

Would you swallow your pride and say yes?

In all honesty, I don't think pride is anything to do with it. I think you have to be sure that you can afford to buy the property given all eventualities. £10k is unlikely to make a huge difference in the bigger picture.

kunekune

If we were in our 20s, yes, we might 'start small'. We are in our late 40s, starting again after a long period as expats. We don't want to move again after buying a house, but can't face much longer in rental.

When I say base rate, I mean BOE base rate, ie, 1%. Yes, it is a bank employee mortgage and if he leaves/takes retirement, it will change to a tracker, the current rate for that is 4% for up to 3 years before there is any requirement to refinance. There are no early repayment penalties or limits on overpayments.

Our affordability calculations are based not on what this mortgage will cost us right now - we see that as a bonus and a chance to overpay - but on interest rates as they might well be in 2-3 years. I calculated it at 5.5%. Getting a mortgage isn't an issue: the total we plan to borrow is 1.75 x joint income, and less than 3 x my own income (in a very secure job). With our own deposit and FIL's contribution, we'd have equity of about 25% but that would go up quite rapidly - it's only an 18 year mortgage in the first place, and we plan to pay £2000 a month, rather than the £500 or so P&I 'official' payments. That won't be for ever but even two years of doing that will make massive inroads.

Yes, we can afford it. But without the extra 25K (not 10K, most of the 'gift' goes into having a smaller mortgage) we'd settle for something less. That was what the real dilemma was about; a good house versus an ok house, given that both are affordable but the OK house could be paid off even faster.

kunekune

Well, we have accepted my FIL's offer, so tht in a couple of weeks I'll be updating the house deposit figure in my sig to over 50K. However ... our attempts to find a house that someone will actually sell us for a reasonable price are still not going well!

The house that sparked the decision to take the help ... well, I rang and made an offer this morning. But it doesn't sound very hopeful. The sellers apparently accepted a 'conditional' offer last May of something very close to asking price. The condition (the terminology here is not very English, it's more like a New Zealand deal!) is the sale of the purchaser's own house. That hasn't sold, but the offer apparently is still there. This explains why the price has never dropped since last April when the house went on the market. Our offer, of course, is considerably under the asking price. But I think that there is little or no chance of them even negotiating unless something else has changed in the meantime so that they are no longer willing to wait! Of course, their so-called purchaser will almost certainly reduce their offer if and when they ever sell, and we might be a much better bet, being fully proceedable, but sellers don't seem to get it. Or at least, the sellers of any houses we like!!!!

QTPie

Good luck.

If the vendor doesn't seriously consider you offer, then they are mad (although I don't know the figures involved): a bird in the hand and all that...

Most vendors are not even considering offers that are not proceedable at the moment. There is someone VERY interested in buying my house, but they need to sell theirs' first, so they have not made an offer (and will not do so until/unless they are in a position to proceed).

If I was that vendor, I would look long and hard at yyour offer.

Good luck
QT

kunekune wrote: »

Well, we have accepted my FIL's offer, so tht in a couple of weeks I'll be updating the house deposit figure in my sig to over 50K. However ... our attempts to find a house that someone will actually sell us for a reasonable price are still not going well!

The house that sparked the decision to take the help ... well, I rang and made an offer this morning. But it doesn't sound very hopeful. The sellers apparently accepted a 'conditional' offer last May of something very close to asking price. The condition (the terminology here is not very English, it's more like a New Zealand deal!) is the sale of the purchaser's own house. That hasn't sold, but the offer apparently is still there. This explains why the price has never dropped since last April when the house went on the market. Our offer, of course, is considerably under the asking price. But I think that there is little or no chance of them even negotiating unless something else has changed in the meantime so that they are no longer willing to wait! Of course, their so-called purchaser will almost certainly reduce their offer if and when they ever sell, and we might be a much better bet, being fully proceedable, but sellers don't seem to get it. Or at least, the sellers of any houses we like!!!!

lonestar1

If FIL offered and wasnt asked to help it wouldnt dent my pride to say yes. Asking for the help may but that doenst seem to be the case here. If FIL wasnt happy to help out I doubt He'd offer TBH