Mortgage using parent's house as security

Dannydandan

Hi,

I heard on the radio that it might be possible to obtain a mortgage using my parents' house as security. This is attractive as, although I have a steady job, it would take years to save for a deposit. They haven't completely paid off their mortgage, but there is definitely more than enough in equity to cover a deposit. It seems to make sense for lenders.

Does anyone know who might provide this service or where to read more about it? I haven't found much.

Thanks,

Dan

CloudCuckooLand

As a general rule, debts should not be secured against property unless essential.

Fair enough to mortgage against your own place, as you need a long-term product.

But in my opinion it is wrong to also secure against your parent's house. If you lost your job and house, they'd risk losing their house, too.

There are other deals, Lloyds Lend-a-Hand involving parental savings and Barratt's/Hitachi unsecured loans, which enable parents to assist kids with their house purchase. But being, unsecured, do not have the potential for a double-whammy of house repossessions, that the scheme you mention has...

Have you discussed this with your parents? They may have plans for their equity, already. Like downsizing to go ski-ing ("Spend the Kids Inheritance")

princeofpounds

Seriously, don't do it. You might be in a very good situation, but even if there is a 1% chance of you defaulting, that's a 1% chance of you wrecking your parent's lives. Could you live with that? Could they?

Dannydandan

Cheers fpr replying. It was my mum who suggested it, obviously we'd have to think long and hard first, but I wasn't even sure that it would be a possibilty. The thought of dragging her down too if the worst happened is obviously not a good one! The thought of paying thousands to landlords whilst I save for a deposit also annoys me!

Dannydandan

The Barratt's/Hitachi unsecured loans look interesting, although my parent's income is not exactly stellar, so that might be a problem.

brit1234

Dannydandan wrote: »

The Barratt's/Hitachi unsecured loans look interesting, although my parent's income is not exactly stellar, so that might be a problem.

Its just a con to stop them dropping prices, I would stay well clear rather than get burnt on yet another dodgy Barratt scam.

As for the OP do you really want to risk your parents home when the world is still in economic turmoil.

Go traditional and save a deposit over a few years, cut a few costs and put it all in an internet bank account so you can round it up each month after the interest has been paid. Then enjoy your rising deposit as houses continue to fall in price. I know its frustrating paying rent but I'm sure it would be more frustrating buying today and seeing monthly falls put you in costly negative equity esoecially when you could of bought the same property a lot cheaper in a years time.:A

dippy

Dannydandan wrote: »

Cheers fpr replying. It was my mum who suggested it, obviously we'd have to think long and hard first, but I wasn't even sure that it would be a possibilty. The thought of dragging her down too if the worst happened is obviously not a good one! The thought of paying thousands to landlords whilst I save for a deposit also annoys me!

Don't worry Dannydandan, if you have no/little deposit, you will also be paying Mr Banker thousands in interest :rotfl:

The way house prices compare to rent at the moment, I'd wager there is a very high likelihood you will be paying Mr Banker _a lot more_ in interest in the first few years of a mortgage than you'd be paying Mr landlord in rent :eek:

Yorkie1

If your parents already have a mortgage, I *think* they'd need to check whether their lender was happy for a second charge to be placed on the property - and whether your lender was happy to only have a second charge.

sparky1989

My parents have recently me offered me a similar option to get onto the property ladder. I have to be 110% sure i do all my sums before either accepting or not. I dont know if they will re-mortgage but they say they will to make sure i pay it back which i will. They loaned me some money to buy a car and pay off debts 2 years ago which i have paid back in full A.S.A.P.

Radiantsoul

CloudCuckooLand wrote: »

There are other deals, Lloyds Lend-a-Hand involving parental savings and Barratt's/Hitachi unsecured loans, which enable parents to assist kids with their house purchase. But being, unsecured, do not have the potential for a double-whammy of house repossessions, that the scheme you mention has...

If you don't pay an unsecured debt and you have a property there is the risk that the lender will get a charging order or move to bankruptcy which will risk the parents home.

mustrum_ridcully

What problems could you land your parents and yourself with IF the predictions in today's guardian about 20% falls in house prices in areas with a lot of public sector workers come true?
http://www.guardian.co.uk/money/2011/feb/19/house-price-fall-20-per-cent

It's one thing for parents to help using their savings and another to re-mortgage their house (with two houses at risk if something goes wrong).