First time buyer - using equity in parents home...

kingeasynow

Firstly apologies if I raise a common theme. I have had a browse about for information on my query but can't find too much and I wanted a bit of background before talking to financial advisors/mortgage brokers.

Basically my question is as follows -

Is there any mortgage deals out there that enable a child to use the equity in their parents home in order to act as a form of deposit to get on the property ladder?

A friend of my parents has alerted us to a house near them that is cheap for the area and seems to have a decent scope for a rise in market value with a bit of work. It would be the ideal house for me to get on the ladder however the major problem is I don't have a deposit for the mortgage.

The house is on the market at just short of 110k but having had discussions with the owner(?) they seem to think a bid of around 95k would tempt them.

My parents home has around 50k of equity in it but neither can they afford to have a big increase in their mortgage payments nor would I want to burden them with that. My income would be adequate to cover the associated costs of purchasing the house but having no deposit obviously makes it a no go.

Is there anything out there that offers a good option for my situation?

Many thanks and apologies if I've raised a recurring issue.

:0)

poppy10_2

They would have to remortgage or equity-release to get you the money to use as the deposit.

morg_monster

I haven't heard of one and it would have been something that I would have found I would think in my research (parents wanted to help us with a deposit and I wanted to see ways that didn't involve them just handing over cash). We have effectively done that with the Lloyds lend a hand mortgage, since my parents' contribution to the deposit came out of their offset mortgage which has a very low rate at the moment. They had completely offset the mortgage with savings so in effect they released a bit of equity for us and got a small mortgage which they're now paying the low interest rate on.

I wouldn't think any bank would officially run or sanction any scheme of this kind, as you're leveraging an investment in property to make another investment in property. So they lose doubly if house prices fall. Plus I would say that obviously depending on how much your parents' house is worth, 50k equity doesn't seem a huge amount. For them to be tying some of it up in further property investment could be quite risky.

So anyway in a nutshell I don't see a solution for you down this road.

TrickyDicky

You'd essentially end up paying a mortgage for the entire house value, plus any associated renovation costs.

But have you actually looked round the property? asked why its likely to go for 15% under asking price? have you had a survey done yet?

What about when you move in? how can you afford new furniture? white goods? redecorating? renovation?

kingeasynow

The house in question was being let out and it turns out the people who were letting it were simply keeping the income and not paying their mortgage or something along those lines?

I'm unsure of the full details but apparently they wanted a quick sale and are prepared to take a fair drop.

I've seen photos of the house and most things look cosmetic - my question here was simply aimed at getting a bit of background. It would seem I couldn't find much on what I was looking for as it doesn't exist?

I've heard of equity-release but mainly advertised for older couples looking to harness this equity for whatever reason? Are both equity release and re-mortgaging fairly costly? Sorry for any stupid questions.

Also I'll look into these lend a hand mortgages - many thanks.