Most parents will tell you that you never stop worrying about your children, even after they’ve long flown the nest. Given how difficult it can be to get started on the property ladder for most people in their 20s or 30s, the Bank of Mum and Dad are increasingly getting involved to give their children the best possible chance of buying that important first home.
But with the average deposit for a house in Britain currently standing at a dizzying &51,000, parents need to simultaneously make sure that they protect themselves financially before committing their own futures for the sake of their offspring. With that in mind, here are our top tips for helping your kids to get onto the property ladder:
Bring your children back home (briefly!)
It can be very difficult to save up enough cash for that first home when living in a rented property, purely because the cost of living in Britain can be difficult to manage even if you’re a couple who are both in full-time work. One easy way to help your child and their partner to save some money is to welcome them home for a period. Of course, we can’t help you draw up a washing-up rota, but taking away big costs such as rent, bills and even food expenditure will instantly help them start putting away the money required to get them started.
Gifting or lending them the money
If you’re able to, the benefits of gifting or lending your children money can be huge, as a large sum of cash could mean the difference between being able to secure deals with lower interest rates.
However, this option can be potentially difficult to navigate on a personal level, and comes with a strong recommendation of confirming your agreement with your children and their partner prior to any money changing hands. Make sure you ascertain if you’re either gifting or lending them the money beforehand and if it’s the latter, then set up a repayment plan for your own piece of mind.
A Declaration of Trust document is a good way of confirming this, and it can clearly state who owns what part of the property in the event that your child separates from their partner and the home is sold.
Buy the home with your child
If you’re concerned about the long-term implications of giving your child a lump sum, or are unable to make that sort of financial commitment, then a joint mortgage is a good way of sharing the responsibility. In this case, you and your child are both liable for paying for the loan made to purchase your home, and you can come up with a financial plan for repayment that suits you.
Remortgage your own home
This is another option open to you in order to provide you with a lump sum of cash, which can be a huge help when it comes to putting down that all-important deposit. Again, it’s one that comes with strings attached, given that you will have an increased number of payments to consider, including arrangement fees and interest on a higher mortgage rate.
Whichever route you choose when trying to help your children get onto the property ladder, gaining independent financial advice is strongly advised to make sure that you’re making the correct decision for everyone. Helping your children to buy their first home is an important, personal experience, and one that deserves to be as stress-free as possible.