How to assist your child in buying a home

Money is what new buyers most need. Zoopla’s property site reports that the deposit average paid by first-time buyers is approximately £34,500. Savings required are substantial. It’s not surprising that people look to their family for financial help.

Support can be provided by a variety of means, including a simple gift or loan, a free room to rent, being a guarantee on a mortgage with no deposit, or even using your home or mortgage as collateral.

Consider your options carefully, because helping your child purchase a house could impact your finances significantly, particularly if you are retired or nearing retirement.

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Here are some options:

Spend your money on a gift

The most common way to do this is by giving a gift of money, usually for the purpose of increasing the deposit. It will increase their borrowing capacity, allowing them to get a more favourable mortgage.

It is important to consider this option before making a gift. Your child may not have to pay taxes on it immediately but they could in the future due to the inheritance tax. When you’re looking for property, consider Estate Agents Gloucester like mwea.co.uk

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Did you know?

You can use a Declaration of Trust to protect your money if you’ve given someone money for their deposit, and that person is buying with another friend or partner.

The document will state who received the money and, if there is a breakup in the relationship, it ensures that your child keeps the gift. If they marry, this can be changed.

You can lend them money

You might want to consider lending the money if you know you will need it in the future.

It is easy to create a loan contract. Include any applicable interest and payment terms. Include important details such as what will happen if someone dies or you need to get the money right away.

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Niru Brown

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