Parents want to release a small about of equity out of their property?

richimgd

Hi there,

My parents own a semi detached house, worth I guess around £250k. They have paid their mortgage off a few years ago. Is there a way they could take out about £10-20k out of the equity of the house with a view to lend it to a family member?

I don't know if this is called equity release because that seems to be more about paying the loan back after you die..! It would be a case of helping me get on the property ladder potentially, but I'm not sure what the overall cost of taking a relatively small amount of money, relative to the value of the property would be. The repayment duration would want to be at least 5 years, maybe up to 10 so I'm guessing any interest I would save from having a bigger deposit would probably be a drop in the ocean compared with the interest that would accumulate on the loan...

If anyone can help advise or point me in the right direction of where to find out more that would be great.

Cheers

betmunch

You parents would simply apply for a remortgage. They would have to specifiy what the cash would be used for.

From your point of view, if they then gift you this money you have a higher deposit. But, if you are paying them back as your post seems to suggest, you will need to declare it as a loan on your application.

Can you clarify if you are going to be paying your parents back for the money they are borrowing? Or are they just borrowing it so they can gift it to you?

richimgd

Thanks for your reply. I would be paying them back, yes. My parents both work part time so the repayments would have to reflect their income I guess. I would be able to setup a standing order to their account as well. I didn't actually know what I was asking for was a re-mortgage as they don't technically have a mortgage at the moment.