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Old 13.11.2015, 16:45
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Would you take a mortgage- to help you children?

New trend in the UK, for retired parents now mortgage free and in their 60s, 70s and 80s- to take on a mortgage to help their adult children on the housing ladder- as the prices are so high, they don't stand a chance to be owners ever?

Food for thought for us- one of our adult sibbling is in that situation- and with mortgage rates here so low and tax deductible- perhaps? What do you think.
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Old 13.11.2015, 16:49
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Re: Would you take a mortgage- to help you children?

I thought banks here were reluctant to give mortgages to OAPs. Poor risks.
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Old 13.11.2015, 16:50
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Re: Would you take a mortgage- to help you children?

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New trend in the UK, for retired parents now mortgage free and in their 60s, 70s and 80s- to take on a mortgage to help their adult children on the housing ladder- as the prices are so high, they don't stand a chance to be owners ever?

Food for thought for us- one of our adult sibbling is in that situation- and with mortgage rates here so low and tax deductible- perhaps? What do you think.
What if a pensioner gets a mortgage and then dies before it is paid off... does the house then get automatically sold?
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Old 13.11.2015, 16:51
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Re: Would you take a mortgage- to help you children?

Not if you are known customers, they know your history and you are already an owner.
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Old 13.11.2015, 16:52
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Re: Would you take a mortgage- to help you children?

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New trend in the UK, for retired parents now mortgage free and in their 60s, 70s and 80s- to take on a mortgage to help their adult children on the housing ladder- as the prices are so high, they don't stand a chance to be owners ever?
Food for thought for us- one of our adult sibbling is in that situation- and with mortgage rates here so low and tax deductible- perhaps? What do you think.
Are 100% mortgages granted there or is a minimum 10-20% deposit required like in Switzerland?
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Old 13.11.2015, 16:56
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Re: Would you take a mortgage- to help you children?

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Are 100% mortgages granted there or is a minimum 10-20% deposit required like in Switzerland?
The retirees will likelay already have a house as collateral, so probably don't have to put too much cash in.

No idea what it is like for young houseless couples though.
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Old 13.11.2015, 16:57
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Re: Would you take a mortgage- to help you children?

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What if a pensioner gets a mortgage and then dies before it is paid off... does the house then get automatically sold?
Well of course, unless there is a surviving spouse, and s/he can afford to keep the house and mortgage. I would go back to UK if I was left on my own anyhow.
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Old 13.11.2015, 16:58
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Re: Would you take a mortgage- to help you children?

Very very difficult to compare the 2 markets.

The fact you don't provide a source makes it even harder to put some flesh to the bones of the story.

UK mortgages tend to be income based so I suspect what is happening is that the (middle classed) retired parents take out equity from their own homes, give it to the children as a (large) deposit so that their lower incomes can finance a mortgage.
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Old 13.11.2015, 17:00
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Re: Would you take a mortgage- to help you children?

We got a 90% mortgage with our first house in 1973. But it is very rare now. From WHICH consumer guide:

Mortgage deposit explained 100% mortgages

100% mortgages are extremely rare for most first time buyers today

As the name suggests, a 100% mortgage will allow you to borrow the full value of the property you want to purchase without the need to place a deposit with your lender.
Current 100% mortgage deals

Only one provider currently offers a 100% mortgage deal. In September 2011, Aldermore Bank launched the Family Guarantee Mortgage, the features of which include:
  • Allowing you to borrow 100% of the value of a property
  • A family member must be willing to guarantee any amount above 75% of the value of the property
  • This means that parents or grandparents must guarantee 25% or lower of the value of the property. So if you were to borrow £200,000, the guarantor would have to be willing to place a £50,000 charge on their home.
  • No money from the guarantor is required upfront, but if your house was repossessed, your parents would be liable for any shortfall.
  • Two year and three year fixed rate deals are available at 5.98%
  • The mortgages are available on a repayment basis only
Knowing how much you can borrow can be confusing, especially when it comes to 100% mortgages. Which? Mortgage Advisers can help first-time buyers get on the property ladder with our impartial and jargon-free advice. Call one of our expert advisers on 0808 252 7987.
If you want to compare mortgages yourself, seeing how they score for customer service as well as costs, check out Which? Money Compare.
The risks of 100% mortgages

The biggest risk of 100% mortgages is that you will instantly be in negative equity - owing the bank more than your property is worth - if house prices fall.
When 100% mortgages were more common many people took out the loans banking on increasing property prices to quickly reduce the loan to value. When the property bubble burst in 2007/08, thousands of borrowers were faced with the prospect of negative equity, high repayments and the risk of job loss as the wider economy faltered.
100% mortgage alternatives

For most first time buyers, you will need to build up a deposit of at least 5% of the value of the property you want to buy. There are a number of 95% mortgage deals available for first time buyers, but tend to come with higher interest rates than those with lower loans to value (the amount you can borrow against the value of the property).
Go further: What is a mortgage? Video guide - find out what type of mortgage is best for you
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Old 13.11.2015, 17:04
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Re: Would you take a mortgage- to help you children?

From here:

The headline of the article is attention grabbing but what's it's really suggesting is a way of people helping their family members (grandchildren particularly I imagine) get on the property ladder.
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Old 13.11.2015, 17:06
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Re: Would you take a mortgage- to help you children?

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New trend in the UK, for retired parents now mortgage free and in their 60s, 70s and 80s- to take on a mortgage to help their adult children on the housing ladder- as the prices are so high, they don't stand a chance to be owners ever?

Food for thought for us- one of our adult sibbling is in that situation- and with mortgage rates here so low and tax deductible- perhaps? What do you think.
My dad loaned my siblings the money for the deposit, as they couldn't save that whilst paying rent .... they have to pay it back to him monthly alongside their mortgage payments.
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Old 13.11.2015, 17:08
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Re: Would you take a mortgage- to help you children?

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Not if you are known customers, they know your history and you are already an owner.
They may increase the mortgage on your current property, depending on your circumstances, ability to pay back and according to FINMA rules.

The banks have got very tough lately....even if they do know you.
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Old 13.11.2015, 17:13
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Re: Would you take a mortgage- to help you children?

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New trend in the UK, for retired parents now mortgage free and in their 60s, 70s and 80s- to take on a mortgage to help their adult children on the housing ladder- as the prices are so high, they don't stand a chance to be owners ever?

Food for thought for us- one of our adult sibbling is in that situation- and with mortgage rates here so low and tax deductible- perhaps? What do you think.
It's a particularly silly thing to do, as it's temporally propping up prices that are too high. Young people can never be priced out for very long unless they are 'helped' by various government schemes & parents.

High end London property has fallen 12% recently, the bubble has probably finally popped.

If UK house prices fell 50% they would not look like a bargain.
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What if a pensioner gets a mortgage and then dies before it is paid off... does the house then get automatically sold?
Nothing automatically happens, the debts need to be settled, legacies paid out. Before any money is paid out IHT has to be paid in full.
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From here:

The headline of the article is attention grabbing but what's it's really suggesting is a way of people helping their family members (grandchildren particularly I imagine) get on the property ladder.
A better way to help people is restrict mortgages to 25 years, repayment only & 15% minimum deposit. Prices would then settle to what people could actually afford.
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Old 13.11.2015, 17:18
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Re: Would you take a mortgage- to help you children?

I'd do it for my son -- but I won't have to. Forward-thinking parents would invest monthly in savings/investments for their children which could be used for their future home, if necessary. If you start saving when your child is born and put away just £150/month, with interest earned at only 1.5% p.a., compounding monthly, and payments increasing by 1.5% p.a. to account for inflation, you'd have just a tick under £65,000 for a 25th birthday gift for your child -- or for your midlife-crisis Ferrari* if it turns out that you don't like your child much by then.

Those numbers were all easily achievable over the last few decades and should be moving forward, too.


*Or Tesla, by then, I guess. Second-hand. Dodgyken will help you out.
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Old 13.11.2015, 17:21
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Re: Would you take a mortgage- to help you children?

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I'd do it for my son -- but I won't have to. Forward-thinking parents would invest monthly in savings/investments for their children which could be used for their future home, if necessary. If you start saving when your child is born and put away just £150/month, with interest earned at only 1.5% p.a., compounding monthly, and payments increasing by 1.5% p.a. to account for inflation, you'd have just a tick under £65,000 for a 25th birthday gift for your child -- or for your midlife-crisis Ferrari* if it turns out that you don't like your child much by then.

Those numbers were all easily achievable over the last few decades and should be moving forward, too.


*Or Tesla, by then, I guess. Second-hand. Dodgyken will help you out.
Of course if you invest in the stock market, you could probably buy the house for cash & not need a mortgage. I would hope to achieve 12% compound over 25 years.
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Old 13.11.2015, 17:24
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Re: Would you take a mortgage- to help you children?

ah hindsight- but you make me laugh When our kids when little, our mortgage in the UK went up to 19.5% - many of our friends had to sell- we managed to hold on somehow. I was a student, and not earning- then later our kids were at Uni- it would have been quite something to put money aside as you say ... different times.
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Old 13.11.2015, 17:27
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Re: Would you take a mortgage- to help you children?

I can understand a helping out with a deposit, but not taking out a mortgage for your kids.

The biggest problem in the UK is the absolute obsession people have with owning their own property. Everyone is under such pressure when at the end of the day it's really not necessary to *own* your own house.
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Old 13.11.2015, 17:31
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Re: Would you take a mortgage- to help you children?

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I can understand a helping out with a deposit, but not taking out a mortgage for your kids.

The biggest problem in the UK is the absolute obsession people have with owning their own property. Everyone is under such pressure when at the end of the day it's really not necessary to *own* your own house.
Agree with this, and I know some people who got a mortgage while young and completely destroyed their ability to live life and have any decent disposable income. It's just silly in my eyes.
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Old 13.11.2015, 17:36
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Re: Would you take a mortgage- to help you children?

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Agree with this, and I know some people who got a mortgage while young and completely destroyed their ability to live life and have any decent disposable income. It's just silly in my eyes.
My mortgage (when 21yo) was lower than rent - by a considerably margin. My parents lent me 15% - 10% deposit and then 5% for fees and basics (bed, sofa, washing machine). When I sold 3 years later the profit was split - they got their cash back + 15% of the remainder.

I then had enough deposit for my second place.
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Old 13.11.2015, 17:36
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Re: Would you take a mortgage- to help you children?

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Agree with this, and I know some people who got a mortgage while young and completely destroyed their ability to live life and have any decent disposable income. It's just silly in my eyes.
What's more is that people spend their entire working lives paying off their mortgage then when they come to retire realise they've not got a pension so then immediately have to downsize in order to survive.

The amount of crap that get's rammed down peoples throats too in the media about "housing crisis" and "first time buyers" is ridiculous. People need to understand that times have changed and it's not your birthright to own your own house. About 35% of people in Germany and Switzerland own their own property, you don't see any problems there.
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