Taking a risk or playing safe!!(6 Posts)
DH and I have seen a house we would like to buy in a really lovely location it ticks all the boxes and is especially good value for money and houses in this area which are a good price don't come up often. Anyway to make it work for us we need a little bit of financial help so we asked my dad for a loan he has said no and is shocked that we asked him as if we can't afford it we don't do it. However we see it is an investment and it would only be a loan and instead of my dad having money in building society we would pay him interest. Anyway has all gone wrong this morning as he worries that we are putting all our money into a house and we may need money for kids to go to uni ( kids ate 6 and 5 at mo) and it is such a big risk to take. We are borrowing some money now off another relative who thinks this is the best opportunity out there and we must go for it!! I have never seen my dad like this he is so stressed out partly because we had the nerve to ask him he is not short of money by any means he just likes it safe on the building society. Anyway where we wrong to ask him? And is it safer to live within our means and not take any risks?!
It is entirely normal to borrow money to buy a house
However it is also entirely normal to get it from a bank - you don't say anything about applying for a mortgage. Your dad sounds like a sensible man - he has savings after all - and if he worries you're overstretching yourself then maybe he's right.
Sit down and do a monthly budget. Is it comfortable? ideally you are saving separately. Factor in the energy and repair costs of a bigger house. Take out life insurance on the main breadwinner in the family. Formalise the loan with the relative - agree the repayment schedule and terms of interest and put it in writing.
It is not a question of taking risks or not. There are good and bad risks. Of course, who knows how life will go - but you must think ahead as best you can.
We have the mortgage all agreed we are just 8 grand short and this house will be gone by this afternoon as such good value In a sought after area. We were originally looking at houses 10 grand less as we didn't have the funds to go any higher but for an extra 8 grand this house is a steal it has 5 viewings booking in today so we have to move fast. Btw we are sold subject to contract so are in a good position to put an offer in. Although we are not borrowing off my dad now he is so worried for us as says we should have money in savings for the kids rather than all tied up in a house!!
He's right that you should have something liquid for emergencies - otherwise if you desperately need money, you'll have to move. So make it a priority to put a crisis fund away. And formalise the £8k loan.
Meanwhile, cross your fingers and tighten your belt. Mortgage affordability calculators are there for a reason; the bank will not lend you 8 grand more for a reason.
I don't think I would have asked, I would have found the money from somewhere else - CC or personal loan - neither are ideal but they are your debt and is not money borrowed from someone else. I find money issues between families normally cause trouble.
I borrowed £5k from my brother to buy our house in similar circumstances.
My inlaws worry hugely about DH and I but they just have different values. They like to play things very safe and think we are reckless. I think they live very small and dull lives and my life to date suggests my "risks" are reasonable.
I paid back the £5k within my planned schedule. The banks wouldn't lend it to me because they were box ticking paper pushers. DH had just changed job - there are lots of reasons to ignore mortgage calculators.
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