Family Equity Loan Plan Questions 2

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Here are more commonly asked questions and answers about the Family Equity Loan Plan.

Can I gain financially from this?

This will be determined by exactly how you would want your very own individual Family Equity Loan Plan to work. The most obvious potential gain would be your share of any rise in property value that may accrue over the years, this gain being realised when the house is sold. Although house prices may be on hold at present, or be facing a modest drop, the medium to long expectation based on past performance, is that of relatively consistent and sometimes dramatic growth in house values. However, it must always be fully understood that no property investment is guaranteed and that there is also always a risk of a drop in property values, particularly in the short term. Some people will want their Family Equity Loan Plan to include an element of interest to be paid during its term to help pay for any loan or remortgage that the parent may have taken to provide this equity loan themselves. Each Family Equity Loan Plan can be made to fit most circumstances which is again one of its most attractive features.

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I want to help but don’t have the savings to do so but I do own my own home. Should I consider remortgaging to provide my child with the support they need?

Ideally the support would be best to come from your long term savings as this is hopefully a long term investment for you with the potential for very substantial returns depending on how the property market grows in future years. However, remortgaging your home or taking a secured long term loan may provide the most practical immediate solution to help you with your Family Equity Loan Plan. Your First Mortgage advisor will be able to provide you with the advice you require to help make an informed decision as to whether this is the route for you.

Do I always have to wait for the house to be sold before getting any money back?

All Family Equity Loan Plans can be written to provide exactly what each party to it wants. If preferred, it can be a condition of the loan that this must be repaid within a fixed term. This can include the proportion of any increase in the properties capital value which can be established by an independent valuation at the time the loan is to be repaid. Alternatively, rather than sharing in the increased value of the home, the loan can be repaid in full or in instalments prior to any sale using an agreed interest calculation, if indeed any interest is to be charged. In fact subject to all partied to the loans approval, the plan can be re-written time and time again to suit changing circumstances, it is that flexible. If the parent so decides, this equity loan can be ‘gifted’ should the circumstances suit, usually when a child decides to get married or have children to support themselves.

Not found the answer to your question? Contact us now to discuss the Family Equity Loan Plan with one of our friendly, expert advisors, or see Parents Questions for further information about the Family Equity Plan.

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