Gransnet forums

Legal & money

Release equity to help daughter? Can we do it?

(16 Posts)
lmm6 Mon 15-Apr-19 19:12:10

DD on low income topped up a bit with benefits and is living in a rented property. She comfortably pays the rent of approx £600pm. We could afford to give her a deposit for a small house - say around 40%. Could we finance the rest by borrowing against our home? (Don't want to do Equity Release as it sounds dreadful.) Thinking if we borrowed against our own home, DD could afford to pay us rent (for the amount we'd borrowed). Then when we pop our clogs it'd be hers anyway? Anyone know or done similar? As we're 70 I'm guessing they wouldn't lend to us, other than Equity Release schemes?

HildaW Mon 15-Apr-19 19:48:05

I am not a fan of Equity Release. They are very poor value for money and there will be nothing left for your daughter to inherit (the equity is soon used up)even if a scheme makes it seem easier at the moment. My main worry is however that her benefits would be altered.....she could actually end up worse of by being funded by you. You really need to get some VERY trustworthy and independent financial advice.

paddyann Mon 15-Apr-19 19:52:37

Buy to let mortgages are available to people over your age ,the house will be its own security and I dont think theres any reason why you couldn't rent it to her as long as her rent covers the mortgage and a bit more .Ask a reputable mortgage broker for info .Interest rates are currently very low and there are long fixed rate options .Good luck ,hope it works out for you .

FlexibleFriend Mon 15-Apr-19 20:16:53

If you did equity release you can opt to pay the interest so you never owe more than you borrow. Interest is around 5% and you can only borrow a percentage of your houses value, I don't know the exact figure but it's between 30-40% of the current value of your house. If your certain she would pay you then you can use the 600 quid to pay the interest each year. You can usually make 4 payments a year and can pay upto 10% of the loan each year. Of course when you die the amount you borrowed will have to be repaid somehow, usually from the sale of your house. Find out the facts regarding equity release rather than listen to outdated scare stories on here before you decide.

crazyH Mon 15-Apr-19 20:42:46

Imm6 - is your daughter your only child? If there are other children , I would make sure that they are aware of your plans, in respect of fairness to all.

Tangerine Mon 15-Apr-19 20:58:51

I think you should get reputable and professional advice and then think very carefully.

M0nica Mon 15-Apr-19 21:14:43

Alternatives are equity release as a lifetime mortgage where you pay the interest (if your income is up to it) so that only the capital ahs to be repaid wheb the propertyis sold.

But, like others, the best way forward is professinal advice

FarNorth Mon 15-Apr-19 21:19:25

It's likely that your daughter would not get housing benefit for a newly bought property, owned by you.
That can easily be checked by emailing the housing dept of her local council.

jura2 Mon 15-Apr-19 21:20:09

agree with PadyAnn, much better solution.

paddyann Mon 15-Apr-19 21:40:06

the thing is if her mum is just asking for the mortgage to be covered she might not need to claim housing benefit and the house will grow in value too

paddyann Mon 15-Apr-19 21:40:19

the thing is if her mum is just asking for the mortgage to be covered she might not need to claim housing benefit and the house will grow in value too

paddyann Mon 15-Apr-19 21:40:19

the thing is if her mum is just asking for the mortgage to be covered she might not need to claim housing benefit and the house will grow in value too

FarNorth Mon 15-Apr-19 21:42:50

You're right, paddyann, but I thought I'd mention the HB just in case it is relevant.

paddyann Mon 15-Apr-19 22:55:50

dont know why that posted 3 times ,no cancel button on here ...lol

paddyann Mon 15-Apr-19 22:59:10

I rent a flat to a family member ,the rent is under the going rate but still covers the mortgage + as stipulated by the company lending on it .So family member gets a good deal .

Ledonster Mon 15-Apr-19 23:16:47

Message deleted by Gransnet. Here's a link to our Talk Guidelines.