Would You Re-Mortgage Your Preston Home to Help Your Child onto the Property Ladder?
How far would you go to help your child get on in the world?
Many Preston parents move area to ensure their child gets into the best primary school or fund their university costs. Many of you reading this have even helped your children with the deposit for their first home from savings.
However, I have come across many Preston people in their 50’s and 60’s, who have good jobs and incomes, yet don’t have the savings to give to their children to help them buy their first home. It doesn’t help when you consider …
The average value of a Preston home has risen by 19.4% in
the last 5 years, from £170,900 to £204,096.
I am therefore seeing increasing numbers of parents who are willing to re-mortgage their own Preston home or start a new mortgage (when they own their home outright) — to get their children onto the Preston property ladder.
So, whilst the Government is trying to turn Britain’s 20 and 30 somethings from ‘Generation Rent’ into ‘Generation Buy’, the Bank of Mum and Dad are mortgaging their retirement to pay for it all. Yet it need not be cost prohibitive borrowing the deposit as you still have access to interest only mortgages.
With an interest only mortgage, your monthly mortgage payment covers only the interest on your mortgage, not any of the original capital borrowed. This means your mortgage payments will be lower than on a repayment mortgage, remembering though at the end of the term you will still owe the original amount you borrowed from the mortgage provider.
1 in 14 new mortgages are interest only and 1 in 5.5 existing mortgages are interest only mortgages, they are very popular.
Anyway, many Preston homeowners might be worried about having that level of debt in their golden years. However, many plan to pay off the mortgage when they downsize as they get into their 60’s and 70’s.
I talk to many Preston homeowners, who are asset rich but cash poor and desire to help their children onto the Preston property ladder. Their attitude is their children will inherit their property when they pass away, so it seems practical to give them that money to work harder for them earlier in their life when they need it to buy their first home.
Can you get a mortgage, even if you are retired?
A lot is dependent upon your age and financial position. The mortgage companies will see if you have adequate funds for your retirement and emergencies plus leaving enough equity in the property to enable you to downsize in the future. Like all things, you need to take advice from a qualified mortgage arranger.
So, that then begs the question, is there enough equity in Preston homes to borrow against?