bjkeates
Quote:
you can put parents house as a guarantee and borrow descent sum of money
You could, although to do that in the current economic climate you'd have to be mad.
So why would you have to be mad to do that then? The inherent value of property is only important at the time of sale.
Nominally if your parents have an average 3 bed semi (in the south east before the arguments starts) then that is a circa £400,000 house). Lets say you have a £250k mortgage on the house this is about a £1500pcm effort.
So if you borrow £100k from them you can pay for zero to hero including type rating, line training, food, accom the works and even include loss of earnings over say 18-24 months. (let's not get thread creep to discuss the morals of this route)
So to the balance sheet your parents (or your own) the house has 100k secured on it. This doesnt affect your resale value and the money has been borrowed at 6 or 7% which you would never get from a bank you need to repay £500-700 per month when you are working which from a £2k pcm salary is easy and from a £3k salary is almost hardly noticeable.
You have only one creditor and they are family, interest rate is set and regardless of market conditions when it picks up you are ready with everything done. Maybe you get a job straight away maybe you take 5 years to get one. That's just down to right time, right place, right people stuff.
This works if you are 18 or 48 why on earth would you not use available equity!!!!!!!!!!!!It would be mad NOT to.
P.S. For those who go what about if the house prices fall, well unless you sell why would it matter, you just wait until they go up again!! Let's be honest since 1922 house prices have doubled every 7 years ON AVERAGE so whilst your £400k house with 250k +100k of security may fall in value to 200k at some point in this slump or any other slump as long as you do not sell it your mortgage doesn't change and you do not loose anything. In fact you save as there is no way that you can borrow money any cheaper than that.
Before you ask. I borrowed money for training against my own property in exactly this fashion and have reaped the rewards.
VT