Assisted Mortgage

Tina_Russell

Hi,
We would really appreciate your help and advice please, if at all possible.
We are trying to get our daughter on the mortgage ladder, but she has a bad credit rating which we will doubtless impair on her borrowing ability in the short to medium term.
She is paying off her debts and her credit rating is improving but very slowly,
We are thinking about taking out a new mortgage in our name (our previous mortgage has now been fully redeemed) to help her acquire her first property.
I am currently in full time employment (aged 55) and my husband is retired (aged 69) receiving a Company Pension and Statutory State Pension.
Our daughter is saving through the government assisted ISA, but the bulk of her income obviously goes towards her monthly rent. Our aim is to take out a mortgage in our joint name, for our daughter to secure a property and them repay us.
Cleary you would need more detail as to our and our daughters financial status, income and outgoings etc, but we wanted to establish this idea is feasible.
Any advice or recommendations would be greatly appreciated

Arleen

I will recommend to not do it. If she stops paying on the house, can you keep paying for it? If not, you are asking for trouble, as you will be as liable - and people with bad credit got there because, well, they didn't keep their obligations before - one way or another.

If you want to help her then save up instead, and when her credit file is healed up (there is no credit ranking, only what's on the file matters) gift her the money for a downpayment.

cjmillsnun

I have to agree with Arleen.

She also needs to concentrate on clearing the debts before sticking money in the ISA. The sooner they are satisfied, the sooner the adverse on the file starts hurting her less credit wise. She can then concentrate on saving afterwards.

The interest rate on savings is rubbish at the moment anyway so if any of the debts are still accruing interest then it will save her money to pay them down quicker.

Also at 55 you're going to get a 10 or 11 year mortgage, and dependent on the size of your Husband's pension, his income might not count for affordability at all.

From your age, I'm guessing she's in her 30s so she should be able to get a full mortgage after everything has healed credit report wise.

System

Alarm bells ringing. What makes you think she'll make the payments every month without fail until she gets to a point she can get a mortgage herself? She's already got years of proving she'll welch on agreements she has made which is why nobody will lend to her.

If you want to create family arguments and possibly end up with an estranged daughter this is the way to do it, nothing divides families as much as money and there are plenty of posts on the loans board where people have lent to family and lost the money.

It is one thing to gift your daughter a deposit where you don't expect to be repaid, it is another thing entirely to get yourself into debt for them for the rest of your working lives and possibly into retirement. Any money she doesn't repay is less you have to live on in retirement.