Helping my son buy a house

gashead_lin

My husband and I are fortunate to have some capital which we would like to use to help our son get on the property ladder but we are not sure of the best way to do this. Any advice please from someone who has already done this?

planning303

Put money towards his deposit - simple

poppysarah

Has he saved some money himself?

House buying is a serious, adult, financial transaction that needs serious consideration and preparation.

Saving a deposit yourself shows that you can handle your money, are aware of the long term benefits of doing so, and are less likely to get into financial trouble in the future.

hazyjo

Will you want the money back, or are you saying it would be given as a gift?

Ta.

Jx

ruggedtoast

gashead_lin wrote: »

My husband and I are fortunate to have some capital which we would like to use to help our son get on the property ladder but we are not sure of the best way to do this. Any advice please from someone who has already done this?

The easy way is to give him the money and hope he doesnt blow it all on things unrelated to houses.

The harder way would be to act as a guarantor for him in the mortgage. You would effectively be applying for a joint mortgage, but only his name would be on the deeds. You would have to qualify for the mortgage yourself.

Not all lenders want to see proof of deposit anyway, and some are happy enough for you transfer the deposit straight to the solicitor on exchange day.

C_Mababejive

Make sure that he also pays a reasonable amount toward the deposit.

Make sure that you register your interest in the house in relation to the size of your contribution.

Simples

The_Blue_Hatter

gashead_lin wrote: »

My husband and I are fortunate to have some capital which we would like to use to help our son get on the property ladder but we are not sure of the best way to do this. Any advice please from someone who has already done this?

I was fortunate enough to have parents who done this for me. Choose a house and agree a price. Gift him the money (chq or bank transfer) when you come to finalise the mortgage and thats it.

00ec25

Easiest is to treat it as an outright gift of, or towards, the deposit, pay it directly to the solicitor yourself

Make sure you are not named on the deeds otherwise you will have a recorded interest in the property and exposure to capital gains tax
if you give him >£3,000 it would be a gift subject to inheritance tax rules ie you must live for another 7 years for it to be free of IHT when you eventually die

The_Blue_Hatter

poppysarah wrote: »

Has he saved some money himself?

House buying is a serious, adult, financial transaction that needs serious consideration and preparation.

Saving a deposit yourself shows that you can handle your money, are aware of the long term benefits of doing so, and are less likely to get into financial trouble in the future.

Im sure the OP knows their child well enough to decide whether they want to gift their own child a deposit (and should it go tits up they will know they only have themselves to blame!).

I was lucky enough to be gifted a small deposit and the resposibility of knowing that parents had done this was more than enough to stop me getting into trouble. Seven years on and no missed payments, one upsize move and less than fifteen years left.

evenasus

00ec25 wrote: »

if you give him >£3,000 it would be a gift subject to inheritance tax rules ie you must live for another 7 years for it to be free of IHT when you eventually die

Inheritance tax comes into the equation, if your estate is worth over £325,000.00.
Although today, houses alone take people over the threshold for IHT.

We paid off our son's mortgage a couple of years ago, so still have a few more years to 'survive', in order for that transaction not to come into the equation,

Can't take it with you when you go.