Remortgage home - Grandson acting as guarantor??

Micksims

Hi All,

I'm looking to buy my first home with my girlfriend, we want a house which we can spend the next 10 years in and start a family so we're not after the typical 1 bedroom flat (we're also both 31, leaving it late I know!).
We're trying to get £30k together for a 10% deposit on a house.

My grandmother owns her home outright and it's currently worth around £250k, she is coming up to 90yrs now so well into her retirement. I am the only grandson and everything is left to me in the will. She has this thing about keeping everything in her name so she won't put anything in my name.

My thoughts we're if she was to try and remortgage the house (release £30k of equity) and I act as guarantor for the repayments is this something that can be done?

Simply waiting for her to pop her cloggs is probably out, my family have a habit of living into the 100's and she's far from her death bed!

My plan is to borrow £30k out of her house to get me started, give her 2 years worth of mortgage repayments up front so she has the peice of mind and then pay the £30k back using gained equity in my new house.

Does all this sound crazy or anyone got any better suggestions?

Many Thanks,

Mike

Radiantsoul

I wonder if a bank would go for it to be quite honest. Certainly I would hope a decent high street bank wouldn't. Your grandmother presumably has no easy way of servicing the loan and so you would be called upon instantly. And if you couldn't or won't pay they would have to repossess her house...

Trollfever

From the FSA:

If you’re retired and living on your pension you may be considering equity release as a way of getting cash from the value of your home. Find out how it works.

http://www.moneymadeclear.fsa.gov.uk/products/equity_release/equity_release.html

CloudCuckooLand

Try saving some of your income, like most people do.


Its not "she" who wants to ask for a remortgage, its you.

She's obviously a bright old girl, who seems to know what sort of person you are, hence keeping your name off the documents.

Shame she has only got you to leave her worldly goods to...

Sad thing is, if you acted like a man and just asked outright for £30k she'd probably get it for you.

Caz3121

If you are looking for £30k as a 10% deposit you are implying you have enough income to cover a mortgage of £270k - so £60-90k between you ....are you not able to save for the deposit

not_tonight_josephine_2

Micksims wrote: »

My plan is to borrow £30k out of her house to get me started, give her 2 years worth of mortgage repayments up front so she has the peice of mind and then pay the £30k back using gained equity in my new house.

So your plan is dependent on the property increasing in value by £30k over the next 2 years? What happens if it decreases in value instead? How will you pay off your grandmother's mortgage in that scenario?

It sounds like a terrible plan (from your grandmother's point of view) to be honest.

uzubairu

Micksims wrote: »

Does all this sound crazy or anyone got any better suggestions?

In a word 'Yes'.

Better suggestion - Save up your own deposit.

Micksims

I'm sorry, I thought this place was meant to offer help and support? I suppose when people go to their parents asking for help these days their out of order too and should save their own deposit, great move people that will really help the housing market!!!

Cloudcuckoland - for your information, me being kept off any deeds is nothing to do with me personally (my now passed on Grandad infact).
I didn't realise that asking to borrow a part of your inheritance early for 2 years was such an offence to some people!!
As for paying it back after 2 years no problem, I earn good money for sure and the line of work I do I will never be on the doll, if the housing market hit the wall I would simply go get a home owner loan to pay the money back, obviously I can't do that without a home to borrow against!

This is my second and now last post to these forums as the welcome is about as warm as the uk weather right now!

Cannon_Fodder

But you are not going to your parents for support. You want to put a financial charge on the home of a person who has insufficient income to support it.

If you have such a great salary, then saving a deposit should be a doddle. If you cannot save when you do not have kids, then how will you afford to repay the £30k once children come along...?


If the property you buy, with a 10% deposit, suffered a 10% loss in value, you would NOT be able to get a fresh loan on the "equity" in that property to repay your Grandmother. You would have zero equity.

No job is immune. It might be a remote possibility, you might get a huge payoff to alleviate any financial concerns, but it is not a guarantee for life.

Putting a loved one's home unnecessarily at risk for short term convenience is not very nice, imo.


Oh, and if you decide to go ahead anyway, bear in mind that you can only be gifted £3k a year. HMRC will tax the £30k if she dies within 7 years. Taking it early means its no longer part of your inheritance.

And if she needs a care home, the council will view it as partial deprivation of assets.

uzubairu

Micksims wrote: »

I'm sorry, I thought this place was meant to offer help and support? I suppose when people go to their parents asking for help these days their out of order too and should save their own deposit, great move people that will really help the housing market!!!

Cloudcuckoland - for your information, me being kept off any deeds is nothing to do with me personally (my now passed on Grandad infact).
I didn't realise that asking to borrow a part of your inheritance early for 2 years was such an offence to some people!!
As for paying it back after 2 years no problem, I earn good money for sure and the line of work I do I will never be on the doll, if the housing market hit the wall I would simply go get a home owner loan to pay the money back, obviously I can't do that without a home to borrow against!

This is my second and now last post to these forums as the welcome is about as warm as the uk weather right now!

I thought you posted here because you wanted an answer to your question.

Didn't like the answer so you want to sulk.

Best bet is to wait till grandma passes away. You might have grown up by then.

Thanks for passing by. We'll miss you. :rotfl:

Conrad

No you cannot take out nor guarantor any kind of debt on your grandmas place.

If she has to go into care suddenly then the state will want her house anyway to pay the care home bill, but you'll be glad the money went on her rather than you of course..............