Should I accept Parent's Help - FTB?

Hourglass

Hi

I have recently postd on the Debt-Free Wannabe board as regards to my debts but for the sake of brevity they are almost £10k. I currently live with my parents and commute almost 60 miles each way to work, a journey taking an hr 30/45 mins and earn £17k.

My company has offfered to pay me a relocation package within 3 months of solicitor's fees, removal costs and a Disturbance Allowance of 3 weeks money. However with my debts I cannot afford to buy or rent really so have been considering flat-sharing in the short term until my debts have been paid off and then save a deposit and therefore will not use this package. Once my debts are cleared I could probably get a £60k mortgage but (as usual!) this does not buy much and the bank will give me considerably less with my debts!

However my father has offered to "loan" me an extra £30k paying back to him each month (he reckons £150 each month) which I can then use to pay off my major debt of £7k on a loan and the rest to get a property. I will then also be ale to use my relocation package which I cannot (except for the removal cost) if I am flat sharing.

Is this a sensible idea as it is automatically building in negative equity or should I stick to my original plan of flat-sharing?

Thanks for any help in advance.....

bobsa1

I don't know which area of the country you are in or your exact situation. All I can say is that back in 1989 (big housing boom time) my dad helped me by paying my mortgage for 1year.

This meant that dh and I could buy our first home (we couldn't have done otherwise due to car loan payments, so things don't change that much!)

If we hadn't have had this help we would have had a nightmare getting a home so I would say talk it through with your parents, what happens if you can't pay one month etc.

Work out if it is possible to buy a property and then do it & be forever grateful to great parents.

Hourglass

Thanks bobsa1

That seems a very similar situation to mine. I would love to take my Dad's help but am really worried about the £7k of negative equity that would be built into the mortgage before any payments would be made! But then I suppose you are expecting the property value to increase by more than £7k.

It's good to know that I am not in the only one who has ever been in this place but it is awkward as I am sure you know.

Then there are the gloom merchants who that the bubble is burst. But that is something else entirely.

lynzpower

Sorry it was a bit unclear there, you are effectively securing the loan/ debt on your property if you did this.

Do you have the money saved for solicitors fees/ searches/ transfer money etc. Seriously, dont borrow it. I did and its come back to bite me on the !!!.

Havent you only just started this job this week? Hun, see how it pans out first. You also need to see what you can afford in payments, especially if interest rates rise even one percent. It could end up stuffing you even more.

InMyDreams

Hourglass wrote:

However my father has offered to "loan" me an extra £30k paying back to him each month (he reckons £150 each month) which I can then use to pay off my major debt of £7k on a loan and the rest to get a property.

Is this a sensible idea as it is automatically building in negative equity or should I stick to my original plan of flat-sharing?

As I understand it, the mortgage company will ask you about all your loans, including what you may have borrowed from your parents, and will take this into account. Can't see them going for this. Unless, of course, you are not planning to tell them. Or would your father be guaranteeing the loan too? Could this be another way round it? But that would mean putting his house up as security too, I think.

Hourglass

Hi lynzpower - you are right I have just completed 1 week into my new job. The stickler is that relocation package which I can use from starting upto 3 months. They will pay the solicitor's fees (they have their own solicitor), the moving costs and give me 3 weeks money once contracts have been exchanged.

InMyDreams - my Dad has said that there was a way that he could get me the extra £30k on top of what I could have and I would pay him back directly. I am unsure whether this is through releasing equity on his house or otherways. He mentioned it on Friday before going away this weekend and is going to speak to me about it when he returns tomorrow.

I am not sure entirely how this works but just thought that I would get some ideas/opinions before jumping!

Normally I would give the job a few months but the commuting is long and my relocation package is only eligible for 3 months and if I were house hunting I'm sure it would take a while.

sanfrancisco

Hourglass wrote:

Then there are the gloom merchants who that the bubble is burst. But that is something else entirely.

Would you feel gloomy if you were able to buy a house/flat without your Dad's help?

Hourglass

sanfrancisco - I would feel less gloomy! I think I am more worried about the idea of negative equity here. I don't really like borrowing off my parents either as it is not their fault that I am in this situation however my father thinks I should be borrowing and should at least get on the ladder.