- Salli Anstey
With families now being offered new ways to pool their resources and help hopeful first-time buyers get on the property ladder, the ultimate gift this Christmas might not be delivered by Santa (or Amazon) and it certainly won’t be returned.
With soaring deposits and high property prices it’s a struggle for first-time buyers to get a foothold in the housing market. So, to bring some good cheer during the season of good will, we’ve pulled together our TOP 5 WAYS family members, whether they be parents, grandparents or other relatives, can help younger family members secure a home they thought was out of reach. You might be surprised to find that for those keen to help, but who don’t have access to a lump sum of cash for a deposit, there are plenty of alternatives.
Flexible family mortgage – using your property as security
An option for first-time buyers who can afford the monthly repayments but are struggling to save for the deposit. A parent or family member can use some of the equity in their own property as security for their child’s mortgage. For example, 10% of the mortgage is secured against the parent’s property and the remaining is the responsibility of the child.
An option for first-time buyers who don’t have the required deposit or have financial circumstances that may discourage lenders. Family members who own their own property can use their income and credit levels to guarantee the mortgage debt.
With this option both family member and child can jointly own a property with both names on the mortgage and deeds. The size of the loan will be based on the earnings and assets of both. A version of this, the joint borrower sole proprietor mortgage, allows a family member to help their child buy a home by joining their mortgage. The parent isn’t named on the title deeds with this version – avoiding a higher stamp duty.
Family offset mortgage
An option to boost income levels in order to afford repayments. Family members, such as a parent, can put their savings into an account linked to their child’s mortgage. The money in the savings account is then deducted from the mortgage, making the child’s repayments cheaper still allowing them to have full rights to their property.
An option for those who are struggling to save for the minimum percentage needed for a deposit. A gifted deposit is a sum of money, normally provided by a family member, that forms all or part of the cash required for a deposit.
All the above options are subject to individual financial circumstances and lender specifications, so give us a call at Private Wealth Mortgages on 01403 270 006. We can provide you with a free, no-obligation consultation where we will consider all the viable options available to you and advise on the best way forward. Alternatively, email: firstname.lastname@example.org