Parents should offer their homes as guarentees

Graham_Devon

Discussed earlier...

Should parents offer up their homes as guarentee's to banks to enable their children to take on 100% mortgages?

Seems some appear to think so. This revolves around the whole pension thing, where it's suggested only the well off have pension pots big enough to cater for the lib dems policy, whereas many more parents have a house.

It was back to the idea that banks are not lending, and young people can't save deposits, therefore they are not "allowed" a house. If their parents put their house up as colateral, the banks can lend at 100% again, and this will improve the flow of the housing market, leading to an increase in tranactions, but also values, therefore drawing a line in the sand. (apparently).

Seems were getting ever more desperate.....BUT, it's an idea...so does anyone think it may work?

CLAPTON

the purpose of a guarantor is to pay when there is a default;

if the likelihood of a default is small there is no reason to have a guarantor

if the parent can afford to pay their offsprings debts in the event of a default then they can lend them the money in the first place

if the parent can't afford to pay in the event of a default then they would be mad to act as a guarantor.

sadly no real research has been done into why the market has dried up and while lack of funds is part of the issue, lack of confidence by potential buyers is also an issue.

The_White_Horse

i have reported this thread because i am offended by it. only one response. that is offensive.

Cheers. TWH.

Loughton_Monkey

I find the whole debate, so far, to be sensationalist and purile.

Any "intelligent" debate should simply be about the concept of richer parents helping their poorer children by giving them a financial kick-start. Why debate each individual method?

There are simply dozens of ways they can do this. Bung cash at them, pay a monthly allowance to them, guarantee a mortgage for them, re-mortgage their homes for them, pledge their pension lump sum [!?!], buy a house for them, buy a car for them.........

I simply wish they would simply get on with it. It isn't illegal for parents to help their kids, and if that's what they want to do, then fine by me. Some parents are helping already. Some may decide to. But either way, the effect on property prices will be infinitessimal.

Linton

Loughton_Monkey wrote: »

I find the whole debate, so far, to be sensationalist and purile.

Any "intelligent" debate should simply be about the concept of richer parents helping their poorer children by giving them a financial kick-start. Why debate each individual method?

There are simply dozens of ways they can do this. Bung cash at them, pay a monthly allowance to them, guarantee a mortgage for them, re-mortgage their homes for them, pledge their pension lump sum [!?!], buy a house for them, buy a car for them.........

I simply wish they would simply get on with it. It isn't illegal for parents to help their kids, and if that's what they want to do, then fine by me. Some parents are helping already. Some may decide to. But either way, the effect on property prices will be infinitessimal.

They should rise just sufficiently to force enough people off the housing queue to accommodate all the kids with rich and generous parents.

Thrugelmir

Graham_Devon wrote: »

It was back to the idea that banks are not lending,

Banks are lending.

About time the debate moved on. Given that we're nearly 4 years on from the point that the the UK banking system was 48 hours away from collapse.

Loughton_Monkey

Thrugelmir wrote: »

Banks are lending.

About time the debate moved on...

I guess the debate will move on, once the 'social amnesia' has been cured.

You see a short time ago, banks were lending more. They were lending far more than people could afford, and far more than was good for some people even though they could afford it. As a result, they went bust.

What people want, it seems, is for them to repeat the exercise. Lend like there's no tomorrow. Allow people to borrow without putting a single penny of their own at risk. Then we can all enjoy another bubble again.

seven-day-weekend

I don't think there should be such things as 100% mortgages. There should be at least a 5% deposit required.

How this deposit is acquired is immaterial (as long as it's legal!).

We gifted our son the deposit for his flat. He's an only child and will get it when we die, so it's merely an advance.

CLAPTON

Loughton_Monkey wrote: »

I guess the debate will move on, once the 'social amnesia' has been cured.

You see a short time ago, banks were lending more. They were lending far more than people could afford, and far more than was good for some people even though they could afford it. As a result, they went bust.

What people want, it seems, is for them to repeat the exercise. Lend like there's no tomorrow. Allow people to borrow without putting a single penny of their own at risk. Then we can all enjoy another bubble again.

in what way was lending to ordinary people in the UK a cause of the financial meltdown?

Generali

CLAPTON wrote: »

in what way was lending to ordinary people in the UK a cause of the financial meltdown?

It probably didn't help NRK much.

CLAPTON

Generali wrote: »

It probably didn't help NRK much.

my understanding was that northern rock went bankrupt because the international funding that they relied on dried up.

I'm unaware that defaults on their mortgage/loan book was responsible.