My parents have offered to help us with the deposit for buying a house. We currently have a house and a mortgage. Does it matter if the money they give us is in a bank account or is used to pay off some of our current mortgage, giving us larger equity in our current house? Do lenders treat it differently if the money to be used against the next house is tied up in the property? I am thinking that paying it off the mortgage we have now would reduce the interest we are currently paying, and allow us to pay more off the capital.
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