Remortgages are increasingly used to fund first-time buyer deposits
Remortgages are being used by more home-owners to fund family members first-time mortgage deposits. The economic crisis has made home-ownership more difficult for first-time buyers who are unable come up with the large deposits required by lenders. Home-owners are choosing to remortgage to help family members who otherwise could not get a foot on the property ladder.
Many housing market experts consider the large deposits required by lenders are at an unreachable level for average UK workers and, the criteria for approval is proving increasingly difficult to meet. Many new home buyers are now only able to afford their purchase through the help of family members who are prepared to remortgage.
Housing market experts predict that many households will never own a home and it is only with the help of family members that many will afford to purchase. Those who are helped to buy are fortunate, as research has shown mortgage repayments are currently below the level of rental fees.
Home-owners are still able to find low rate remortgages which makes the borrowing affordable. Remortgaging will of course increase the debt on a property but, it is often a more financially viable way to borrow money than taking out a personal loan.
Remortgaging to lend to another person, can however be a risky venture for a home-owner, as it puts their own property at risk. For those home-owners taking on remortgages to lend to family members, the risk is high therefore remortgaging should be carefully considered, even when rates are cheap.
