Can I use the equity in my house to help my son buy a house?

Can I use the equity in my house to help my son buy a house?

Rather than giving cash, you can use the equity in your property as security. Known as a guarantor loan (or a family pledge loan), it eliminates the need for your child to raise a deposit because you are putting yourself up as the responsible party.

Why equity release is a bad idea?

The main disadvantage of equity release is that it does not pay you the full market value for your home. You will receive far less money than you would from selling the property on the open market – although of course in that situation you would still have to find somewhere else to live.

Can you use equity release to buy another property?

Equity Release may be used to purchase a new home, holiday home, taken from a buy-to-let property and even from your home where an element is B&B or Airbnb.

Can you lose your house with equity release?

The simple answer is NO. You cannot lose your house with an Equity Release Lifetime mortgage (with some reservations!) The following information is true of any Equity Release lifetime mortgage that is governed by the Equity Release Council and its rules.

How much equity can you release?

The maximum amount you can borrow with equity release is usually up to 60% of the value of your home according to Money Advice Service.

When to use equity to buy a home?

Repay the home loan on your home as fast as possible before focusing on the investment. This way, you’ll have access to more equity and can use it if needed. Educate yourself about investing in property. It’s a huge financial commitment so ensure you pick a good property in a high growth area.

When to release equity to help your child buy a home?

If you need to release equity from your home to help your child buy a property, read our essential guide… Research in 2016 revealed that single first-time buyers now need to save for an average of 13 years to accumulate enough money to put down a deposit on a home. Buyers in London must save even longer to afford to buy a property.

Can you use equity in a property as a deposit?

As a deposit: You can use equity in your property as a deposit against an investment loan. If you have enough equity, you can borrow 80% of the property value without using your own cash. To take out a line of credit: You can structure your home equity loan using a line of credit.

Where can I use my Equity to help my child?

Other lenders who run similar ‘family mortgage’ products include the Vernon Building Society, the Harpenden Building Society and the Family Building Society. If you have raised money through a remortgage or equity release, you can use this cash to help your child under a ‘Family Offset’ arrangement.

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