If, like many hard-pressed first time buyers, you find yourself struggling to get a deposit together and are frustrated that you may not be able to take advantage of the current hold on house prices, a Family Equity Loan arranged by First Mortgage could be the answer to you getting that foot on the property ladder today.
So how does a Family Equity Loan work?
This simply requires support from a family member to become an “equity loan” stakeholder in the proposed home purchase. Rather than gifting a deposit, a family member (usually the parents) will take a stake in the property by providing an Equity Loan secured against the home by a simple minute of agreement. This means that whilst the buyer owns 100% of the home, when the property is be sold the equity loan will be cleared as per the terms agreed in the minute of agreement document.
In general terms, the expected percentage split between the child and parent will be 90% and a 10% Equity Loan making up the balance of the purchase price, although the percentage split can be as much as the two parties to such an agreement decide.
Providers of the Equity Loan will share proportionally in any profits made when it comes time to sell the property, which could potentially make this a very profitable arrangement for all parties involved. Alternatively, the Family Equity Loan can be repaid in full or in instalments prior to any sale using an agreed interest calculation if any interest is to be charged. If the parent so decides, this equity loan can be ‘gifted’ should the circumstances suit.
Why use the ‘Family Equity Loan’ plan?
- First Mortgage will provide FREE independent mortgage advice to both parties, thereafter making a recommendation from the whole of market.
- Helps first time buyers get onto the property ladder, with 100% ownership.
- Provides parents with security on their capital outlay.
- Complete whole of market mortgage source available.
- Solid investment opportunity for all, with excellent medium to long-term potential returns.
- Flexible terms to suit both parties. It will be written under your own agreed terms, which can be amended in the future.
We understand first time buyers don’t want to rely on parents for charity and with a Family Equity Loan this needn’t happen.