Raising temporary finance against a mortgage free house

bize-lize

My daughter and her husband are looking to buy a property with a substantial £350,000 deposit. However in order to have their offer accepted as ‘cash free’ buyers, they are £60,000 short of that deposit figure. This is because they will in fact need to sell an existing property in order to release the £100,000 equity in it. I am wondering if I could borrow £60,000 against my mortgage free house (worth £600,000) for 6 months or so, while they sell the other property. They would then pay me back with any fees incurred. Any ideas please? 

Sandtree

In theory nothing to stop you but you should consider what will be the consequences if it all goes pear shaped after you give them the money and before they repay you. Are you willing to write it off?

bize-lize

No I can’t afford to write it off, but they do need to buy a house and sell the current flat. I guess my question is really about whether a very short term mortgage is an actual product, or whether I would have to go for a bridging loan which I think will be more expensive. 

Nebulous2

What is your situation? Are you working? 

To get a mortgage will require you to have the income to service it. You will also be limited as to how long you can get it for, some for instance are limited to age 75. Shorter time scales will increase the monthly payment. You would probably also want to get a mortgage without an early repayment charge, which would mean a higher rate. 

Couldn't your daughter take a mortgage on the flat and use that to buy their new house as a cash buyer?

They would presumably have fewer hurdles than you, in terms of length of mortgage, for instance. 

tlc678910

Your daughter needs to sell her existing property or take a mortgage to buy the property.  This is like most people.  I don’t understand why they are putting themselves forward as having enough cash available to buy when they don’t and making this into your problem - when you also don’t have this money available.

Is the property they are buying cash buyers only i.e. unmortgageable?  Is their existing property hard to sell e.g. a flat with cladding certification issues?  If the house is unmortgageable it might need a lot of money spent on it.  If their property is hard to sell it might not be sold for a long time. 

I would advise you not to go rushing in trying to solve this for your daughter and leaving yourself paying a mortgage for the forseeable.  Let them work it out.

sourcrates

Isn't £350,000 enough to buy a house outright ?

Surely they could buy somewhere cheaper, but instead there passing the problem on to you, who can`t afford it either.

Maybe they should either wait until they have the full deposit, or look at not spending so much money on a house.

MalMonroe

Agree with Sourcrates. With the best will in the world and the best of intentions, things DO sometimes go pear shaped. Your daughter's an adult now and she and her husband should be sorting this out themselves. Just think for a moment what would happen if you didn't have any equity in your property. They do actually have equity in their own property. 

There MUST be lots of cheaper houses than your daughter and her husband are aiming for. A £410,000 deposit must mean they're buying an absolute mansion. Which is great, if they can afford it. But they can't right now. 

I would never do it. Much as I love my daughter - she'd never want me to either. It's not even as if your daughter and son in law are homeless. This is a big gamble that may fail - and you'd be in a much worst position than you are right now. 

Borders2017

WOW, what a sense of entitlement you have instilled in your daughter!
She needs to use her own finances and take the timeline to suit those. Not be asking you for money.

If they cant afford to raise the finance themselves via a bridging loan then tough boobs.
They will have to wait until the are in a position to buy or move to a cheaper area

DO not be guilt tripped into trying to raise money against your own home. this IS SUCH A BAD IDEA. what if they split? what if one lost their jobs?
It sounds like they NEED A MASSIVE REALITY CHECK

macman

A 60K mortage that can be paid off in just 6 months without penalty is likely to come with a very substantial arrangement fee.
As others have pointed out, if it all goes pear-shaped, then you will be potentially homeless.