Mortgage with your parents

Financial institutions examine the situation of a potential borrower very closely, and many factors can make a positive decision harder to obtain. The possibility of taking out a mortgage with your parents is a solution that opens up new opportunities for all parties to the transaction. On what terms is such a loan granted? Read the latest article!

• A loan with a family member – conditions to meet
• Removing the parents from the mortgage
• Is it worth taking out a mortgage with your parents?

A loan with a family member – conditions to meet

The main factor that disqualifies young people is the lack of a long credit history. The bank has no confirmed information on the basis of which it could assume the client's future solvency. The type of employment is also taken into account when a credit decision is made, which is why many people employed under civil law contracts lose the opportunity to build a history that is credible to financial institutions.

Applying jointly for a mortgage with your parents is a solution that can considerably increase creditworthiness. The condition to be met is that the parents have adequate earnings and an impeccable history of repaying earlier obligations. For young people this is often the only chance to obtain a loan to buy their dream flat.

When applying for a mortgage jointly with a parent, you must take into account the age criterion applied by banks in such a case. The upper age limit most often adopted by banks is 70-75 years. This is the maximum age a borrower may be when paying the last instalment of the loan. It is possible that the bank will ask for the parents' life insurance policy as a form of security for the financial obligation.

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Removing the parents from the mortgage

Obtaining a mortgage jointly with your parents does not mean we are forced to repay this obligation together for the period agreed with the bank. We can remove the parents from repayment once we meet the relevant criteria.

When the situation of the young person who is the borrower improves and stabilises, we can then submit an application to the bank for an annex to the agreement. Under this document the parents will be removed from repaying the loan, and the applicant will gain the option of applying to extend the overall repayment period of the loan. It should be remembered that the bank will reassess our creditworthiness.

For the young borrower this means a lower monthly instalment, at the cost of extending the overall duration of the loan.

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Is it worth taking out a mortgage with your parents?

In our opinion this is a solution suited to the situation of many young Poles who want to own a flat but, because of insecure employment conditions or a lack of credit history, are deprived of that possibility. Taking out a mortgage with your parents allows us in many cases to obtain a positive decision from the bank, but it is not a solution entirely free of drawbacks.

Contact the REMAX Gold estate agency. Our specialists will give you detailed information on the conditions to be met when applying for a mortgage with your parents.