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Advice needed on helping children with house deposit with equity loan.

  • 06-05-2021 8:46am
    #1
    imokyrok
    Registered Users Posts: 521 ✭✭✭


    I'm a widow and mother of 3 aged 22 to 29 who live with me. The oldest is currently trying to find property to rent with his girlfriend of 3 years. He has recently gotten a civil service job after finishing his Masters and his girlfriend has a job with reasonable salary. However having both been always living at home with parents and having no history of renting it seems to be going against them with potential landlords.

    I'm wondering if they should attempt to buy instead especially when I see how high rent is but they don't have the large lump sum necessary. Is there any way to use my home as collateral for the deposit they would need? They would have to pay the mortgage and pay back the collateral loan but I think it would be similar in amount to monthly rental anyway. If I was to offer this as an option I would need the loan paid of quite quickly so I could offer the same arrangement to the next oldest in turn.

    Has anyone else tried something like this?


Comments

  • #2
    Jim2007
    Moderators, Business & Finance Moderators Posts: 10,363 Mod ✭✭✭✭Jim2007


    imokyrok wrote: »
    Has anyone else tried something like this?

    This is a really bad idea. Do not pledge any of your assets like this because you don’t know how things will work out and you will need those assets for yourself in old age or maybe to help one of your children in an emergency.

    Rental property is not easy to come by in any case, but they have good jobs and it’s a case of keeping at it until they find something.

    Alternatively let them maintain their current situation and work on saving a deposit for their own property.


  • #3
    awec
    Administrators Posts: 54,004 Admin ✭✭✭✭✭awec


    Surely if they are living at home putting together a deposit of their own should be easy?

    If your oldest is nearly 30 having never left home and no savings at all then it's definitely time to have a conversation about money with them.


  • #4
    Wheety
    Registered Users, Registered Users 2 Posts: 5,512 ✭✭✭Wheety


    I wouldn't. If they're only together 3 years and haven't lived together yet, what happens if they break up?

    I wouldn't even say it to them as they might put pressure on you then. They should rent first before buying. Even if it's only a year.


  • #5
    imokyrok
    Registered Users Posts: 521 ✭✭✭imokyrok


    awec wrote: »
    Surely if they are living at home putting together a deposit of their own should be easy?

    If your oldest is nearly 30 having never left home and no savings at all then it's definitely time to have a conversation about money with them.

    He used his savings to go back to college and get a masters so that he could get a higher paying job. He is only back in employment a couple of months and has saved enough for a rental deposit but so far he has no luck in getting accommodation.


  • #6
    imokyrok
    Registered Users Posts: 521 ✭✭✭imokyrok


    Wheety wrote: »
    I wouldn't. If they're only together 3 years and haven't lived together yet, what happens if they break up?

    I wouldn't even say it to them as they might put pressure on you then. They should rent first before buying. Even if it's only a year.

    I haven't said anything but I am aware that saving 40,000 for a home deposit is going to be exceedingly hard if they are paying the guts of 2000 per month in rent.


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  • #7
    [Deleted User]
    Posts: 0 ✭ [Deleted User]


    imokyrok wrote: »
    He used his savings to go back to college and get a masters so that he could get a higher paying job. He is only back in employment a couple of months and has saved enough for a rental deposit but so far he has no luck in getting accommodation.

    If the only problem is no references then that is easily solved with some imagination...


  • #8
    OEP
    Registered Users, Registered Users 2 Posts: 1,183 ✭✭✭OEP


    I have often written a fake reference using my friend's name and contact details, and they are obviously aware of this in case they get a call


  • #9
    phormium
    Registered Users, Registered Users 2 Posts: 3,345 ✭✭✭phormium


    imokyrok wrote: »

    Has anyone else tried something like this?

    Country was rife with it back in the Tiger years, if it wasn't 'equity release' (another name for borrowing) then it was life loans which only recently they were on about on Joe Duffy.

    It seldom ended well and you would be risking your own home no matter what way you try and do it plus I doubt any bank out there is going to down that rabbit hole again!

    I think there is no alternative but for them to save like mad!


  • #10
    berocca2016
    Registered Users, Registered Users 2 Posts: 242 ✭✭berocca2016


    Hi OP,

    Try not to do it this way, you borrow the initial sum and then the interest compounds year on year. The charge will build up and up, if you ever have to sell you need the permission of the lender and you might not be the owner of any equity in the house any more.

    To get your child ready for a mortgage first they need to establish their credit rating, and prove even with a potential parental gift that they can save enough to cover the mortgage and a bit extra.

    If you do feel the need to borrow to help them in anyway, use the credit union. But don't feel obliged to, its your house, your money and your future!


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