Nationwide UK Family Deposit Mortgage

G

Gordon Gekko

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In the UK, Nationwide offer a product which works as follows:

- Someone with equity in their home increases their mortgage and gifts the proceeds to a family member who then uses those funds as their deposit for a home purchase.

History doesn't always repeat itself, but it generally rhymes...
 
A generation of parents now about to be guilt education in to borrowing to help their kids.

Hideous is right

It's like no one learnt by past mistakes
 
And now Barclays are doing it...the "Springboard Mortgage".

The bank take security over the parents' assets and advance the deposit to their son/daughter...
 
I see nothing at all wrong with this.

It's much cheaper to rent money than to rent a property.

If a father has a house worth €500k with no mortgage, and his daughter wants to buy a house for €200k with a 90% mortgage, it makes sense for the father to borrow €100k so that both of them are under the 50% LTV and she can get a much lower rate.

Brendan
 
Hi Brendan,

The "rate arbitrage" piece makes perfect sense. It's the banks getting older people on the hook for debt that I've an issue with. It also creates greater liquidity and arguably pushes up prices further. "Self made people" already have to compete for property with liquid wealth; as a result of these types of products, they have to compete with leveraged wealth also.

Gordon
 
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