Oh, you think so
Just think about it, purely hypothetically, that everything goes downhill in the 4th year. You probably haven't paid off €50k, but the early repayment penalty for the bank on your over 100% financing will still be added.
The auction would then bring in 80% and your parents lose their house. It's quite simple.
I don't "think," I ask
According to the advisor's calculation, the installment for the 50,000 would be about €300 – I can hardly imagine a case in which it would be impossible for us to pay these €300 if everything really did go downhill. Not to mention that my parents could also cover these €300 themselves and certainly would if both of us suddenly became unable to work. But I understand your point; on the whole, anything can happen, so I guess one should never take out a loan, right?
Manageable, but existing. That has to be clear to both of you. Otherwise, it’s a completely normal procedure for an additional land charge to be set.
How about another option: parents take out their own loan and lend you the money? Then at least the risk of your insolvency is gone and the parents would only have the financing burden?
That would certainly be an option, the only downside being my parents would then have to pay taxes on the interest.
I don’t like a land charge on the parents’ house at all. Look at how much early repayment penalty you have to pay on a loan. A (forced) sale early on leads to remaining debts in six-figure amounts. Then the parents’ house is obviously due.
Better borrow money from your parents, or even better, have it gifted, if possible. If there is no free money there, then better leave it.
Well, if large sums were available, we would already have been gifted them, but since my parents themselves have made many investments in their house, there isn’t much liquid cash right now. That’s why they are offering the land charge.