|Flat/house deposits for younger family members
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|Author:||Mr Fishy [ Tue Sep 17, 2019 11:01 am ]|
|Post subject:||Flat/house deposits for younger family members|
After Dongs endless moaning about me new boat
I'd throught I'd take 5 mins and post on my biggest waste of money in the last 12 months
Look away Dong now, this will make you wet your nappies
For example reasons, I'm going to use a 1 bedroom flat in Brighton.
https://www.rightmove.co.uk/property-fo ... 10371.html
The asking price is 180k, deposits 18k and the money replacements are around £700 per month. Add on another 5k for solicitors and stamp duty.
So your sick of living with the kids. They moan about your b/f's staying over and finding you passed out on the kitchen floor. Eat all your food and won't help out will bills
Its time for them to go
You look at the 18k deposit and think "oh yeah baby" I'll give it to them just to get them out me love dungen
It's not that simple. Those of us who remember the 1990's remember when interest rates hit 17%. It's better to put down 1/3 for a deposit just encase interest rates start to climb again.
This reduces the monthly repayments at the start down to £533 and means if interest hit 10%, they can still afford the repayments of £1000 per month.
Also you need to bare in mind all the extra costs of home ownership. Your kids have no idea of them after spending years of bleeding you dry. It's a bit of a shock for the poor honeys. Above all else you need to make sure repayments are affordable or there be back at home within 6 months and you will be cleaning up the mess.
Young people make mistakes with money and relationships....as we did. The last thing you want is some scruffy little tw*t moving in for 6 months and claiming 1/2 the flat. You don't want to get stuck playing 1/3 of maintenance costs too.
You need to cover the investment. A contact for this deposit with your child will cover this. And dont be kind about it. You need to secure it on the property and make it clear you are not liable for maintaining or repairs. A death cause is useful too. ( You drop dead in asda, its there's, you have enough of them over Christmas dinner and beat them to death with a cracker, it's yours.)
You need to cover their investment too. You mite be older, but are you wiser? Let's say you fall in love and your new lover wants marriage and more, then runs off with all your money. This happens a lot more than you think to people in their 40's/50's.
A no 3rd party owner clause in the contract cover it.
The best way by fair is a trust and this covers all the bases.
Above all else talk and listen to your solicitors advice. Run thru all the what "if's". Don't be emotional, forget there your kids and deal with it like any other investment.
Is it worth doing long term?
Hmmmm..... I stay in my first flat for around 3 years I think
Within a few years they may want to move too. Start a family or find another job outside the area. So the best way to see this is a short term investment. If the property market crashes, you will lose money.
Any investment with young people is high risk and if you can't afford to lose the money, don't make the investment.
And here is why:
Say you take out a loan on your home to cover the deposit. Interests rates go up and the market collapse. The flats worth 1/2 of what you paid for it. The kids have run up thousands in bad debt and the mortgage lender is going to reposse the flat.
You lose the lot and still have to pay off the loan you took out. So be careful and don't let emotions get in the way
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