Help or hindrance?
Question from Amanda updated on 10th August 2012:
I am going to purchase my family home and take over the mortgage of $180,000 as my parents are unable to service the debt any longer. Will taking out a mortgage now (I am 32) hinder me in obtaining another mortgage in five years time when I would like my own property and to start a family? I want to make sure I am making the right decision by helping my parents now but also setting myself up for the future?
Our expert Kris Pedersen responded:
The major effect will be on your serviceability as the bank will assess the $18,000 debt against you even if your parents do end up assisting you in funding it. You are probably best to assess your serviceability at this stage to see how you look. Note that there will have to be a fair few assumptions in doing this as your income and living situation could change greatly in five years. Note also that the "qualifying" or "assessment" rates that banks use are exceptionally low and in five years time could be much higher which will also have a detrimental effect on how the serviceability looks so to not put yourself in a position where you cannot get into the market yourself I would recommend to add 2% to the assessment rates to see how your position looks at that stage. At Kris Pedersen Mortgages, we have access to the majority of servicing calculators that the banks use and would be happy to do this for you. Just email us at email@example.com
Kris Pedersen of Kris Pedersen Mortgages is a commentator on property and finance. His team sources top finance strategies. www.krispedersen.co.nz