Mortgage using parent's house as security

Gwhiz

Do kids get taught at school now that renting is bad?

Dannydandan

Putting seven grand a year into a landlord's pocket or investing that money in a property - it's a no-brainer to me.

I'll defer any decision for a while anyway, as the cuts and housing benefit changes haven't kicked in yet and they are bound to have quite an effect on the market.

I think it may be a reasonable risk for my mum to take on - if I lost my job (unlikely at the moment and a redundancy payment would cover a deposit's worth) I could pay rent for a while anyway and look to rent out the flat. It'd probably come down to whether the mortgage provider were happy with my parent's situation.

westlondonbuyer

Dannydandan wrote: »

Putting seven grand a year into a landlord's pocket or investing that money in a property - it's a no-brainer to me.

A friend of mine moved to London in 2006. He also thought buying rather than renting was a "no brainer" and that a property was an "investment".

Except it's now 2011, his partner is having a baby, and they've had to sell the flat.

They've sold at the same price he paid in 2006.

Except in between he's spent £15k on a new bathroom, kitchen and windows, because he thought that was "investing" in his property. Oh yes, and to buy and sell, he also lost cash on stamp duty and estate agents' fees.

Some "no brainer" that turned out to be.

Your own home is NOT an investment. It's an opportunity cost.

Snuggles

There is no way in the world that I would ever enter into a financial arrangement which placed my parent's (or anyone else's) home at risk, even if it was their idea. All sorts of unexpected things can happen to drastically alter your financial circumstances - redundancy, illness, accident etc.

It's one thing to take on that risk yourself, but to involve others is IMHO short sighted and a not a little selfish. Fair enough if you needed money to fund life-saving medical treatment or something, but doing this simply to fulfil your own "want" to get on the property ladder - is it really worth it?

I do understand why you think it's so important to have your own property rather than pay rent, as I was just the same, and bought my first property four years ago. I have to say though, I now realise it's not all it's cracked up to be. Don't underestimate the financial burden of ongoing maintenance and repairs - I often wish I was free of that responsibility, as I was when renting. And also consider how tying property ownership can be. I am spending a fortune on commuting costs as my circumstances have changed since I bought the house, but I can't afford to sell due to negative equity, so am stuck. It's not as simple as saying, oh well just rent out the house, as you have to get permission from the lender, who then raise your interest rate for the privilege.

Really, unless you are fully prepared to live with the possibility of being responsible for your parents losing their home, don't do it.

poppysarah

Dannydandan wrote: »

Hi,
I have a steady job, it would take years to save for a deposit.

Save your own deposit. Buy your own house.

The fact they're unaffordable isn't going to get better if everyone uses these silly schemes that help keep the prices propped up.

brit1234

Dannydandan I would never dream of doing such a thing to my parents. Save a deposit like everyone else and stop putting your family's future at risk.