Loan security - BBVA

[veetwo]

VC10 Rib22,

I understand what you are getting at. It is a massive gamble and perhaps you and others think it is not sensible to secure the loan against a parents property. Fair enough, indeed it may well be an unwise course of action in some cases.

In others, it is merely a decision about how is best to finance the course. A lot of parents could, if push comes to shove, find the money for the entire course without having to sell their house or affect their quality of life. Equally they could, in the event of disaster, cover the repayments or the cost of the loan. Unfortunately, not many parents are willing to hand things out like that on a silver platter. Sure, they love you, but they expect you to take some of the responsibility.

For example, take the parents who, if they wanted to, could sell £60,000 worth of shares to fund their son or daughter. Great, they don't have to secure the loan on the house. Unfortunately daddy decides that he'd rather keep earning dividends on those shares for the moment, so secures the loan knowing that if worst comes to worst, cash from another area can be diverted. This is just one of many possibilities. Other parents might fund part of the course and secure a smaller bank loan.

There is one point i really disagree with though. People who stand up and say "go and bloody earn it, nothing comes easy in this world m'laddo" are just wrong. There are many ways to skin a cat. For me to earn £60,000 would take years and years and years. "OK so what?" I hear you say. Well, for a start, if I dont start training for 10 years I'll be 34 when I finish. I've lost 10 years of potential earnings as a pilot (and probably spent those 10 years earning a lot less than I otherwise might have as a FO) and I've also become a bigger training risk for the airline. My job prospects don't look as good, and when I do start a job I won't be able to work for as long.. my pension will suffer, I still won't have a foot on the property ladder, I'll probably have very little to my name, and by the time I'm 30 something I may well have a family to support and think about. Thus, there are many many arguments for getting a loan and getting on with it.

I'm not for a minute saying that the family who will lose absolutely everything if things go wrong should secure their property against a large loan. Thats not what I'm saying. Clearly that would be a silly gamble. What I am saying is that for certain families the risk is in reality very low. Its certainly not as cut and dry and some people make it out to be. Defaulting on the loan does not necessarily mean that your family has to beg on the street.

V2