I want to help my daughter to buy a house

Norman-B

My wife and I want to assist our daughter with house purchase. We are both 59. Both work part time, me due to health, wife due to bringing up 6 year old grandson. We are thinking of giving our daughter £80k plus from remortaging our house (worth £350k). What is the best way to go about it? Equity release or remortage? We are unable to assist her from savings. We know very little about this, so any advice welcomed.

meanmachine_2

You could start here... guarantor mortgages are what you're thinking of.

http://msn.whatmortgageonline.co.uk/aProblem.htm

Brokers on here will tell you the legal implications.

Personally I'd advise against taking equity out of your own over-inflated home to buy another over-inflated home, but it's your look out.

I think you're also responsible legally for the second property, should the child fail to make payments.

I'd never ask my parents to do this for me, as I think it simply helps prop up an insane property market, but that's a decision for you to make once you've read up on it.

Norman-B

Many thanks for the reply.
I realise there are dangers with this but I feel the need to help. If we don't have the savings, what other means are there?

lisyloo

Despite your wish to help you may be doing something financial disastrous.

I would suggest reading this

http://www.firsttimebuyerhelp.co.uk/uploaded/file/ftbbeware.pdf

and then think of whether there are any better ways that you can help out.

savedup

Hi

Would it not be possible for your daughter to rent a property for the present, until the long awaited correction in the housing market takes place ?
Otherwise she will find herself in negative equity very soon after purchasing.

She could perhaps use this time to save some money for a deposit, when the house prices become more affordable.

I appreciate that you are anxious to help your daughter, but it could make the situation worse for both of you in the medium term.

P.S Is there a difference between "Equity Release" and Re-mortgaging ?

Hope these observations help a little.


Regards.

Norman-B

Thank you for the replies. My daughter is paying £700 per month for a flat at present and considers it "lost" money. I thought that rather than leave her money when we pop on, I would give it to her now. I will seek advice on Monday but be aware that those giving the same advise might have a vested interest.

meanmachine_2

Well no one knows where the market will go. I only know what's happening at the moment, and house prices ain't going up that's for sure. Provided your daughter is putting a little money aside each month, then renting isn't money down the drain.

If she isn't doing this, or is getting into debt, then yes you should explore helping her out.

Except...these types of weird mortgages only ever really pop up at the peak of a market. So maybe that tells you something.

lisyloo

My daughter is paying £700 per month for a flat at present and considers it "lost" money.

Rent is not dead money (not anymore than interest on a mortgage is).
You need to compare it with mortgage interest, repairs and buildings insurance.

There's an article here with more comprehensive detail on why it's a myth that rent is "dead money".
If house prices were rising fast then it might be different but at the moment they are likely to stagnate or fall.

http://www.firsttimebuyerhelp.co.uk/articles/article.aspx?id=9

Also have you considered your own long term care?
If you give away everything and then need state benefits for long term care then the local authority will look carefully at any large amounts you have given away. They could potentially take the money back off your daughter.

You cannot give all your assets away and then expect the state to look after you (I'm not suggesting you are trying to do this but it's a consequence that you ight not have considered).

herbiesjp

Does she have a deposit of her own at all?

Norman-B

herbiesjp wrote:

Does she have a deposit of her own at all?

Yes, she has a deposit.

lisyloo

What is the best way to go about it?

You seem to have quite a large house (unless you live in an expensive area).

How about your daughter lives with you for a while and saves the £700 per month rent (and lower bills and council tax).

Just an idea.