Best way for mum to help me get on the housing ladder

mufi

May not seem relevant, but do you have any siblings who may expect the same treatment, and were it not to be forthcoming may cause a schism in your family? I write as someone probably nearer to your mother's age than yours, and we have made a decision to give our three offspring as much help as we got onto the housing ladder (snake?) You may be able to guess how much that was...

It has certainly concentrated their minds rather wonderfully on saving instead of racking up debt.

dopester

hebridies wrote: »

She doesn't have much in the way of savings. She has about £10k left on her mortgage and her house is worth about £160K. I have no deposit or savings.

In terms of getting finance for a flat is it more viable in these circumstances for my Mum to remortgage her existing house to raise a deposit / the purchase price of the flat (roughly £70k) or can she use the equity in her house to help us get separate mortgage for the flat (even though we don't have a deposit)? Or is there another way of doing this?

Your Mum is in her early 50s and in a fairly secure financial position. She's no doubt seen the value of her own home rise with the precious HPI, and only has £10K of the mortgage left to pay.

What if house prices fall hard again after the election? Withdrawing £50K-£70K equity release on a £160K house leaves her quite a substantial amount of debt to service on her existing home for a woman who is maybe 10 years approaching what could be a fairly secure retirement, with her home paid off - if you don't go through with this scheme.

The power of leverage can work wonders for massive profit gains in boom-times, but it can quickly destroy people when values fall, or circumstances change (job loss, pay-cuts, being exposed to lenders coming to take back both properties).