Posted on 10 December 2018 by Howard Phillis
I want to release equity from my home/my parents home as they own it outright to use as a deposit for a new mortgage. I’m wondering about the implications of doing it from mine or my parents.
It’s important to note that depending which way you decide to go will heavily impact what you need/implications. If we take the scenario of your parents home - Any borrowing secured on your parent's house will have to be in their names. There are some lenders will also allow you to be named as an additional party on the loan, but this will not affect the property title.
Lenders will want to be sure that your parents are not being coerced into borrowing and whilst you may be able to either guarantee or be named as a joint borrower, depending on their ages it may make it difficult for you to raise a loan. The usual requirement is that any mortgage is repaid by the age of 75 and that your parents must be able to afford the mortgage based on their pension incomes.
I don't know if you have any brothers or sisters, but any borrowing on your parents home could adversely affect their estate should they die during the mortgage term. For this reason I recommend that you discuss your proposals with all your family and that your parents take independent legal advice before entering into any loan agreement.
It's also good to know that with your current property, you may be able to remortgage to raise funds or it may be possible to raise money against the new property, but the rate and type of loan will depend on numerous factors.
For more information on remortgaging – please see our remortgaging guide.
I believe we can help you and that you would benefit from speaking to one of our independent mortgage advisers. Please call 0344 346 3672 and tell the consultant the date and title of your question, they will then be able to help you find the right mortgage for your situation.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
We recommend you seek professional advice with regard to any of these topics where appropriate.