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Using Current House As Collateral To Buy Another House
slondon1979
Posts: 7 Forumite
Hi
My dad currently owns a house with a value of around 450000. The house is completely paid off with no mortgage or debts in his name at all. He is trying to find out if he can buy another house for me to live in by using the value or equity in his house to do so. Does anyone know if he would be able to do this or if there would only be a certain amount of money he could take out of the house. Ideally would look to take around 250000 if possible.
My dad currently owns a house with a value of around 450000. The house is completely paid off with no mortgage or debts in his name at all. He is trying to find out if he can buy another house for me to live in by using the value or equity in his house to do so. Does anyone know if he would be able to do this or if there would only be a certain amount of money he could take out of the house. Ideally would look to take around 250000 if possible.
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Comments
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Presumably you mean he'll take a mortgage out on it to access the money? Obviously that will cost him interest...
Would it be a gift or would he be owning it with you as a tenant?
Jx2024 wins: *must start comping again!*0 -
hiya jo
well he doesnt work and is retired now so i thought he wouldnt be able to get a mortgage?
It could be either, whatever makes it work. if i could have it as a gift then great but obviouslly if the only way round it was for me to be listed as a tennant then that would be fine.0 -
If he has no income, he cannot raise a mortgage and he cannot be a guarantor for you. His only options would be some form of equity release scheme, but this may be neither suitable, nor advisable.
The best option may be a "helping hand" or "family assist" type product. This would mean you find a property and get a 100% mortgage. The lender takes a charge over his house for a 25% deposit on yours.
You have to have income and a decent credit history, as usual.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
thanks for your help kingstreet. what sort of equity release schemes are out there? Are they some what risky?0
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slondon1979 wrote: »thanks for your help kingstreet. what sort of equity release schemes are out there? Are they some what risky?
Equity release can be a good idea but it can also be a bad idea, there is a main site post about equity release by Martin that is a good place to start: http://www.moneysavingexpert.com/news/protect/2010/06/should-you-equity-release0 -
He could sell it?0
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slondon1979 wrote: »well he doesnt work and is retired now so i thought he wouldnt be able to get a mortgage?
It could be either, whatever makes it work. if i could have it as a gift then great but obviouslly if the only way round it was for me to be listed as a tennant then that would be fine.
Ah, didn't know that. As above, 'equity release' could be an option, but he should tread very carefully and make sure he fully understands any implications!
Might be issues if you're planning to be a tenant as far as 'helping hand' or 'family assist' options go. If it's a gift, I presume that should work.
Jx2024 wins: *must start comping again!*0 -
slondon1979 wrote: »thanks for your help kingstreet. what sort of equity release schemes are out there? Are they some what risky?
They're risky because they come with high interest rates and (normally) have no option to repay the principle except by sale of the house that they are secured on (and sometimes even then, only if the occupier dies or goes into a "home"). So you'll have no option to remortgage at a lower rate and pay it off later.
tim0
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