How can my mum release equity to provide us with a deposit?

ch-ching

My mum owns a £425k+ house almost outright (believe the tiny mortgage left expires this year) and has offered to help us get on the property ladder by giving us a deposit. However, we are all a bit confused as to how to go about this. We have researched the idea but 'lifetime mortgages' and 'equity release schemes' plus a banks advice to 'gift the deposit' have left us all a bit bamboozled....Can anybody help please?

P.S - To clarify - she wants to remain in her home, so selling it and then gifting us a deposit would be out of the question.

kingstreet

Remortgage if she's working age and has an income to justify the mortgage.

Lifetime/Eq Release if she's retired, close to retirement etc.

There are a few products where a charge can be taken over her property instead of the actual cash being borrowed.

Speak to an independent broker about the possibilities.

amnblog

Mum can simply raise money on the property which she then gifts to you to buy a property.


If she is earning enough on a standard mortgage, if not, on a lifetime mortgage (equity release).


Speak to a broker.


Bear in mind they are other complications with regard to a gift as it may impact on inheritance tax, or later care costs for mum. Get some advice from an accountant in this regard.


Your lender should have little issue with your deposit coming via a gift which you need to declare.

ch-ching

Thanks to you both If she raises money against her property/remortgages wouldn't she then have monthly repayments to make?

foxy-stoat

ch-ching wrote: »

Thanks to you both If she raises money against her property/remortgages wouldn't she then have monthly repayments to make?

Yes - she would have to continue paying the mortgage until she pays back the money she has given you.

pinkteapot

https://www.moneysupermarket.com/mortgages/equity-release/

Says that with lifetime mortgages, you don't make monthly repayments? Instead, the interest keeps accumulating and, when you die, the mortgage is repaid from the house sale before the remainder passes to those in your estate.

I guess the downside is that, if you live a long time, the interest could eat up quite a bit of the remaining equity that your kids or whoever get...

ch-ching

Thanks everyone, have taken your advice and arranged an appt with a broker to discuss in more detail.

merrydance

I have just taken out an equity release on my property. As long as I pay the interest every month on the amount I have borrowed, the interest does not compound. So you never owe more than the amount you borrowed. I saw a broker for this that I have used in the past. Worth paying for the advice in my opinion.