This sounds attractive, but is only possible if the circumstances are right. You could not only get an annual income advantage, but also at the same time help your child. Here is an example (the figures are purely illustrative):
- Your daughter has a mortgage of say £200,000 and pays interest at 5%.
- You pay off £20,000 (10% which often is the maximum possible without a penalty being charged).
- You receive interest at 5% on the £20,000 from your daughter in place of the derisory amount you currently get from a deposit of £20,000.
- Your daughter improves her mortgage rating by having a lower loan to equity ratio. This could be very useful if she wants to remortgage or move home.