Best way to release equity from a home?

bhavinvaland

Hi all,

I've searched the forums and have come across a few threads which offer some info, but haven't quite got what I am looking for.

My Parents are are in their late 50's and approaching retirement. I am looking to get on the property ladder and one suggestion we have had is to remortgage the house in order to release equity for a deposit. Even though I haven't looked into it just yet, I am assuming a remortgage is going to be tough to come by as my parents are close to retirement. What would be the best way to release equity from the property?

Would a possible solution be to transfer the home into my name, thus allowing me to remortgage? Obviously I know it is not as simple as that and there would be a ton of legal and financial implications that arise, but any advice would be helpful.

Thanks

dorset_nurse

Why don't you just get your own mortgage?
If you borrow from your parents there are all sorts of tax implications you could be getting into, and it makes things much more complicated.

BitterAndTwisted

Can your parents afford to remortgage and keep up with the payments given that retirement age is approaching?

It would be a lot less complicated and avoid your parents putting their own roof over their heads at risk if you just did what everyone else does: save up your own deposit and apply for your own mortgage.

Annisele

If your parents can't afford to give you money as an outright gift, then they can't afford to help you buy a house - simple as that.

bhavinvaland wrote: »

Would a possible solution be to transfer the home into my name, thus allowing me to remortgage?

That would certainly put you on the property ladder. If you do that, why bother buying another property at all? Just chuck your parents out of the house; it's yours now. If that sounds unpalatable, remember that if you get into difficulties with the mortgage/get divorced/die/suffer some other unforeseen unfortunate event, it might be exactly what happens. Do you really want to risk your parents' security in their retirement so you can buy a house faster?

dorset_nurse

I love it when people are blunt. Here here.

GlynD

I thionk what the chap is asking about is an "Equity Release Scheme".

lulu650

Article on Equity Release here;
http://www.timesonline.co.uk/tol/money/reader_guides/article3047984.ece

I think the OP is just asking for ideas for his parents to help him with a deposit. I think the first port of call is to find out how much you could actually borrow and afford to repay.

I'd like to help my own sons and probably will. One's paying far too much in rent to be able to save for a deposit. The other, still at home, needs a regular job rather than freelance bits and bobs.

JQ.

Do not use equity release - the cot for a couple in their 50's would be horrific.

Just tell them to go and see an independent financial adviser. I'm sure they'll be able to get a mortgage.

ukcarper

JQ. wrote: »

Do not use equity release - the cot for a couple in their 50's would be horrific.

Just tell them to go and see an independent financial adviser. I'm sure they'll be able to get a mortgage.

Just done a quick calculation at 7.5% which is roughly Aviva’s rate and if you take £50k in 20 years you will owe them about £183k.

joerugby

The best way to release equity is to sell the house. If they are willing to do this and downsize it might work. Otherwise you should wait until they pass away. Don't ask them to borrow.

pozalina

A friend of my mum's remortgaged her house several years ago so she could pay for her son to train as a pilot (spent about £20k in total I believe). She is now well over 60 and still paying her mortgage off, while in the meantime her son has paid back a minimal amount and hasn't even got a job as a pilot. I was shocked to discover that some people will put their own desires before their parents' home. I would never dream of asking my parents for to do such a thing and if I did, I hope they would give me short shrift.