10% deposit AND Parents' 20% equity?

buel10

Hi all.

Hopefully in the next three months my wife and I will be applying for a mortgage. We can just about scrape the 10% deposit but my parents are willing to help regarding equity in their (mortgage free) house. However, I am I right in thinking that it's not just the equity that they have to help with, I read that, with this scenario, they have to put their savings in a specific account too?

ACG

Who do you need your parents help? You have a deposit in place.

buel10

ACG wrote: »

Who do you need your parents help? You have a deposit in place.

Apologies, I should have clarified that - my question should have been phrased as 'how much, if any, of an advantage would using their offer of equity be?'

Caz3121

may help if you name the scheme you have seen
how are they planning to release equity on their property? mortgage, equity release
If they have savings would they not just gift you the savings rather than have to take on debt?
and as above, why?
how much are you looking at saving over the term for a better APR?
how much will it cost them in loan/mortgage repayments?

ACG

It will not help.
Your options would be massively limited, to the point you would be looking at specialist products, which in turn charge higher rates.

Obviously if you can not lend what you need then it may help, but it will cost you.

getmore4less

That sound very Barclays springboard.

Equity in a mortgage free house cannot be used unless converted into real cash, then it is no longer equity but debt.

buel10

Thank you.
Regarding the 10% we have.....we've just about scraped it and we are giving thought to keeping half of it for eventualities and aiming for 5% deposit instead.
Our dilemma is whether to go with HTB and restrict ourselves to a new build (but might have white goods in place?) but lower repayments....or go for 5% deposit on any house, new build or not.

kingstreet

getmore4less wrote: »

That sound very Barclays springboard.

Equity in a mortgage free house cannot be used unless converted into real cash, then it is no longer equity but debt.

There have been several schemes where a charge was taken over the parents' property rather than over their savings.

Aldermore, Marsden, Tipton & Coseley all had such schemes. These were largely overtaken by the availability if HTB MG and the general availability of 95% mortgages today.

I don't know if any of these survive today.

Apparently, at least one still survives;-

http://www.aldermore.co.uk/personal/residential-mortgages/family-guarantee/

kingstreet

..and another;-

http://www.thetipton.co.uk/home/mortgages/pdt03

Marsden's is like Barclays' springborad.