Borrowing money against equity held in my mum's house - is this possible?

Merton

annahavana wrote: »

Thanks for that Clutton, I'll look into her monthly income & will investigate putting it in both of our names. The only concern I had was that I already have a £160k mortgage in my name for my own flat.

If you already have a flat, why do you want another one? It's a really unstable market at the moment, especially for flats.

stillill_2

annahavana wrote: »

We'll be able to pay it as I'm paid significantly more than him!

So if you can afford the 700pcm interest on your mum's money, why not just get another mortgage on your own and leave her out of it?

Rachman_2

And why would the flat be worth more in 6 months time than now ?

Being blunt, does your mother understand she's gambling her house and security against his experience and practical hands on real world skills - has he done this before ? Why will you make a profit on a flat when most others can't (who do have experience) at the moment ?

Do you really want to risk your mum's retirement ? If you earn considerably more, why can't you borrow the money yourself against the property you want to buy ? That way it's all your own work ?

I appreciate everyone wants to do well and parents want to help their kids, but you are going to have to put yourselves on the line too - not just put your mother at risk and have a 'moral obligation' - bear in mind that her house would be in hock.

If the flat is £120K and you spend £10K doing it up (juggle as appropriate), your interest, contingency and fees will eat the other £10K up - so what you really need (assuming you earn £25K gross between you) is a 4xmortgage (interest only probably) for £100K, then you need the other £40K - not £140K...... - without putting your mother's house at risk. I'd suggest with fees added in, it may be better to look at that unsecured between the three of you if you are serious - it also keeps the risk to your mother smaller.

And most importantly, you need to do a lot of working out about the potential (up and down) of borrowing, buying, developing and selling..... - with the best will in the world, an interior designer could quite easily impose his vision on a normal flat and make it unsaleable if he's not careful (but he won't accept it - it's always everybody else that's wrong).....

Good luck, but think carefully about the risks to you and your mother....

brasso

I don't want to sound negative but I think your scheme is risky. You say you don't want to overstretch yourselves but it's possible that will happen. The housing market is getting flakier by the week. You're borrowing a large sum of money at a time when interest rates are higher than they've been for some years. Doing up a property is hard work, time-consuming, and requires skill if it's going to look nice enough to sell on. People tend to underestimate all these things.

Remember that it costs money in fees to buy and sell property, and on top of that (assuming you're not living in it), you'll have to pay tax on any profit you make.

All in all it's barely worth the hassle and the risk.

We all watch Property Ladder and swoon over the bottom line (and Beeny's cleavage if you're a bloke), but in reality most of the punters on there make money by the huge capital increases from house price inflation over recent years -- and which has now all but stopped.

Sorry, I am being dismissive but these days, everyone wants to be a property developer. I suppose I'm also just a little anxious that your poor mum has just paid off her mortgage and it's now being proposed that she takes on a massive debt, just as she's retired. If the market continues to wobble, you could find yourself in negative equity, and in serious trouble.

You have to think about these possibilities.

Equity release is not free money, as people seem to think. It's still a big, expensive loan from the bank, nothing less.

horace_2

I have a very talented boyfriend who studied Interior Design for 4 years at Art School but who is currently working as a baker as he had enough of design and the stress/pressure involved.

4 years at Art School? Is he a slow learner?:rotfl:

For a sympathetic view on this thread click

http://www.housepricecrash.co.uk/forum/index.php?showtopic=51618


horace

meanmachine_2

Leave your poor mum out of this and GET A MORTGAGE YOURSELF.

Oh, on top of the one you've already got.

Some people collect stamps. Others, it seems, collect potentially ruinous debts.

Not so long ago, just after the last housing crash in fact, mortgages were regarded as a burden.

Anyone actively seeking more than one was regarded as a loon. (Ironic, given the boom that followed).

Crazy thread.

[Deleted User]

Dont drag your mum into your problems. Stand up on your own feet. The amount of my friends that have impoverished their parents, its just plane wrong.

Your parents dont owe you a living. If anything you probably owe your mum about 20k from how much shes bailed you out so far that took her 5 years to earn. (just presuming cos you seem like the scrounger type for even suggesting this). You obviously have no grip on money or the value of it, i suggest you learn this by working every hour of the day.

I dont owe my parents a penny and when i have borrowed (borrowed 4k once) ive paid back with 10% interest as its wat i see as fair.

Jim_B_3

On a tangent, what's this someone mentioned about using equity release for a long-term income? Surely the interest you pay on the borrowed money (the 'released equity') will outweigh the interest paid on the money once it's in your bank account, and putting it into investments is literally gambling your house. Have I missed the point of equity release?

b0rk

Jim_B wrote: »

On a tangent, what's this someone mentioned about using equity release for a long-term income? Surely the interest you pay on the borrowed money (the 'released equity') will outweigh the interest paid on the money once it's in your bank account, and putting it into investments is literally gambling your house. Have I missed the point of equity release?

You can use a form of equity release without repayment as a long term income. In such a scheme the lender sells your house when you die and is entitled to recover a fixed amount or a pre-set percentage of the value whichever is higher.

ManAtHome

Jim_B wrote: »

Have I missed the point of equity release?

The only point is that you get the money when you're alive, and the relatives don't get it when you're dead. Sounds like a reasonable deal to me....

Needs to be approached with caution and common sense though.