Can we use equity in Parents house ??

telby

Hi All,

Myself and my partner currently rent. Together are earnings are £35,000. In the area that we live, to buy a house that fits our needs we are looking at around £160,000. Currently well beyond our budget.

My parets want to help out. They have a house worth £250k with no mortgage at all.

Is there any way we can use this equity (they dont want to move) to fund the purchase of a house? The are willing to transfer the deeds of their own house to me if need be.

Any ideas?

Thanks

Trev

dunstonh

s there any way we can use this equity (they dont want to move) to fund the purchase of a house?

If they want to take out a mortgage to gift you money they can. You would have to declare its a gifted deposit from parents but the lenders wont care that your parents borrowed the money.

The are willing to transfer the deeds of their own house to me if need be.

That wouldnt help anything and would create a whole host of potential issues (capital gains tax plus inheritance and deprivation of assets potentially on care provision as well as your parents losing their house if you fall into financial difficulty).

CLAPTON

transferring the deeds of their house to you means giving you the house... are you sure they are willing to give you their house?

presumably you can get a mortgage of 4 x salary i.e. 140,000 so you will need to have a deposit of 20,000
how much have you got?

Senior_Paper_Monitor

There are a number of 'parental assist' schemes on the market that could be used.

They are a bit more complicated than a standard mortage and the use of broker is strongly advised rather than such 'cobbled together' arrangements as you have raised (for all the reasons raised by Mr Dunstonh above). In addition the practice of raising a small mortage on parents house to gift a deposit is common (and one we use regularly - have a couple of those on desk at the moment), as suggested above, but can hamper some estate planning techniques that might be advisable for your parents to be considering at this time in their lives.

telby

Savings currently around £5k

Yes they are willing to sign their house over to me, therfore giving me £250k worth of equity to play with, but still not wanting to sell that house.

CLAPTON

telby wrote: »

Savings currently around £5k

Yes they are willing to sign their house over to me, therfore giving me £250k worth of equity to play with, but still not wanting to sell that house.

All seems as bit mad to me, do they really understand what this means?
However, it won't matter if they don't want to sell.. it will be your house then to do what you will

Senior_Paper_Monitor

Signing it over to you is not necessary and not advisable (see post #2).

I repeat 'YOU AND YOUR PARENTS SHOULD TAKE PROFESSIONAL ADVICE" to avoid mistakes that may come back and 'bite you all'.

Incidentally, you will also loose your FTB SDLT waiver on the property you are purchasing as a result of your plan - that's the first £1,600 impact of your plan.

GMS

If your parents are willing to sign the house to you then they will not be the owners, you will. If this were to be the chosen route then why not sell the property to you for a reduced price, using the equity as a gifted deposit, and your parents use the proceeds of the sale to purchase a property for whatever the sale price is.
That way you have 2 properties with only 1 mortgage in your name.

telby

CLAPTON wrote: »

All seems as bit mad to me, do they really understand what this means?
However, it won't matter if they don't want to sell.. it will be your house then to do what you will

Yes we all understand what it means.

And yes they also understand that I could then effectively sell their house and kick them out if I so desired. All comes down to trust though doesn't it?

leveller2911

Your parents may need the equity in the future themselves.Nuckle down, work hard and save like mad and stand on your own two feet ......

No one knows what the future holds , good or bad...........IMO house prices aren't going North for a few years......

Senior_Paper_Monitor

telby wrote: »

Yes we all understand what it means.

And yes they also understand that I could then effectively sell their house and kick them out if I so desired.

All comes down to trust though doesn't it?[/QUOTE]



Sorry, but ....

No you don't !

No it doesn't !

.... and this point I give up - if you don't wish to listen it isn't compulsory (as you obviously know)