Using equity in another property to get a mortgage

andyj1983

Hello everyone

This is my first post on here, Ive been looking for some answers to a few questions regarding getting a mortgage, i want to be fully equipped with the facts before seeing a financial adviser!

Anyway to keep it brief my situation is this.

I/we a first time buyer with £4k in savings
Me and my partner want to raise enough money to buy a property, say 160k
We currently rent and it would take us at the moment 4.5 years to save a deposit of 25% on that figure, thats too long for us.

Thats straight forward enough. However my Dad owns a flat outright worth £105k, he owns it entirely and lets it out. He has offered that should we wish, he will allow us to use 50% of the equity of that property to help us get our first place on a loan basis only, we would need to repay the money back to him eventually.

What we don't know is can we use this offer he has made to pay for our deposit and if so how?

Can he release equity in a property for us to use? Is it instantly repayable on a loan type basis?

Can he instead re-mortgage the property and we would pay both our mortgage and the second mortgage to him?

Is there something I have not thought of?!

As mentioned any help would be much appreciated, at least if i understand some of the options then i can be ready for that chat with a financial adviser, at the moment it all seems impossible!

Thanks in advance

Andy

nw_man

Your dad can probably release some equity from the flat, subject to situation etc, etc.

He then gives it to you, you use it as a deposit.

andyj1983

Hi nw_man

Thanks for the reply. What i was wondering is though, what is equity release exactly?

Is an equity loan payable straight away once taken, a bit like a mortgage, ie you pay back monthly the amount borrowed + then pay back the mortgage on the rest of the property?

I understand that probably sounds a silly question but ive found it difficult finding an exact definition of what an equity loan is!