Can I Use My Parent’s Equity As a Deposit for a House?
First-time homebuyers have found that saving a deposit to purchase a home is a steep climb. Lenders realise the same thing. That’s one reason why they have made adjustments to their lending requirements. While the conventional loan still requires three months of payslips and bank statements, some homebuyers can turn in alternative financial verification documents. For example, small business owners can turn in a letter from their accountant and an income verification letter.
For homebuyers who lack a 20% deposit, they can use their parents’ equity as an alternative. With this option, some parameters exist. It’s best if the parent owns their home outright. If they do not, they should have a little mortgage left to repay. In addition, lenders take a look at the parents’ current financial circumstances. Although it’s a great gesture, the parents’ financial circumstances should not become strained.
Using a parent’s home equity as collateral for a mortgage qualifies as a parent-assist home loan. They can also take out a home equity line of credit when the interest rates fall into the favourable category. Since several financial ways for a parent to help their children become homeowners exist, Mortgage House loan specialists walk both parties through the process. Several mortgage choice options exist to consider.
Parents’ Equity to Purchase a Home Conclusion
First-time homebuyers can use their parents’ equity as a deposit to purchase a new home. Mortgage House loan specialists will guide the homebuyer through the process of adding a guarantor. Contact our team today.