This page contains a Flash digital edition of a book.
MORTGAGES


THE BANK OF MUM AND DAD;JUMP ON BOARD THE PARENTAL PROPERTY LADDER


As house prices in the capital continue to rise, more first time buyers than ever are turning to the bank of Mum and Dad for financial help.


Statistically the average first time buyer is now 32 years old. Generation-Y is becoming known as the generation of renters and whilst us parents long to help, we aren’t in a position to simply hand-over a sizeable donation. With this in mind, we have compiled a list of handy hints, that could help your brood onto the path to homeownership.


01 Act as a guarantor


By acting as guarantor you take on the responsibility of the mortgage debt should your child be unable to pay. You can even help them to secure a better mortgage rate than they could on their own by boosting their credit rating in the eyes of lenders. Think of it like being a named driver on their first insurance policy (let’s not reminisce too long here).


While this does mean that you would have to step in financially if they miss a repayment, you don’t need to remain on the documents forever. With a few years repayment history under their belt, your children can be on their way to independent ownership.


02 Joint ownership


Both yours and your child’s names will appear on the mortgage and property deeds and the loan secured will be based on your joint assets. Hmm, a house versus their PlayStation, oh the things we do for our kids. Never the less, this can help to secure a mortgage at an improved rate, but it is important to remember that if one party defaults the other becomes responsible for their repayment. You could also become liable for capital gains tax on the eventual sale, but it does mean you can potentially reduce inheritance tax on your own property.


03 Remortgaging 04 Downsizing


This is a more extreme, but a potentially more practical option. With the little birdies flying the nest, you have to wonder what all that extra room is for? You could consider downsizing to release some of the equity locked up in your property. Just don’t stick yourself in a pokey studio apartment so Archie can get a penthouse!


BELondon | November 2016


Leveraging your own ability to borrow by remortgaging is a simple way to help fund a new property purchase, or help towards a deposit. You could either extend the term of your mortgage to absorb the additional cost of borrowing, or you increase the monthly repayments.


05 Family offset mortgage


Hold tight, this is where it gets a pinch complex; If obtaining a deposit isn’t your child’s biggest problem, then this might be a great option to assist them with the monthly repayments. If you have money set aside from long-term savings you can use this to offset some of your child’s total mortgage value, making their monthly repayments more affordable. A special savings account can be created and linked to the mortgage and any money you put in reduces the balance on which interest is charged. Say they borrowed £150,000 and you held £50,000 in savings, interest would only be charged on the remaining £100,000.


06 Help To Buy ISAs


There are lots of different options here so you should seriously consider shopping around. Most offer your children the opportunity to earn a 25% bonus from the government, to put towards a mortgage deposit. For every £200 saved (a month) the government adds £50, up to a maximum of £3,000. The scheme is available up to November 30th 2019 and customers need to claim their bonus by December 1st 2030. Side note; to qualify the property purchased cannot cost more than £450,000.


What works best for you will depend on your own individual financial situation and just how much risk you are comfortable taking – after all you know your child and your finances better than anyone else. We understand the struggle and we want to help you chose the best option. Our trusted mortgage advisors are on hand daily and will fight, just as you would as a parent, to get the very best deal.


For expert mortgage advice call us on 01908 854 436 Your home could be repossessed if you do not keep up repayments on your mortgage. 06 bairstoweves.co.uk £


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57  |  Page 58  |  Page 59  |  Page 60  |  Page 61  |  Page 62  |  Page 63  |  Page 64  |  Page 65  |  Page 66  |  Page 67  |  Page 68  |  Page 69  |  Page 70  |  Page 71  |  Page 72  |  Page 73  |  Page 74  |  Page 75  |  Page 76