Helping offspring to buy?

Granadalad

My son and long term girlfriend are about to finish uni with unclear salary prospects. I would like to help him onto property ladder asap without destabilising their relationship by setting them up as unequals.

I have heard of deed of trust or trust deed or something like that. Can I use one to give him an interest free loan so they buy a house, the loan to be repaid (renegotiated of course) if the house is sold or either party moves out? Will the taxman allow this or does he see an interest free loan as a big gift?

My thinking is they both reap the benefits of any house price inflation, but I recover my money if the relationship dissolves. In fact my son might "gift regular monthly payments to his sibling (already mortgaged) so they equally enjoy the benefits of my generosity" without paying tax. If I can afford it, I'd rather do this now rather than wait for any inheritance.

icklejulez

My FIl gave us 42.5k to help us buy our first house. We basically signed a contract drawn up by his solicitors saying should we ever sell up or split up then the money would be returned to him as 50% property sale price. The were other clauses like death etc in it. As long as you contain the serious things dispite him being your son you should be ok. My FIL did get a hefty tax bill though on the money in the house he didnt expect though not sure on the details.

Catmeister

Hi hope I'm not being a nuisance, just a bit alarmed at the fact that your son and his gf have 'unclear salary prospects' - will they be able to afford to keep up payments on a mortgage as well as cope with all the other expenses of home owning? I bought whilst still at uni, but only because my H could afford (if nec) the repayments on his own... Whilst I think what you want to do is very noble, and your attitude towards keeping the equality in their relationship is fantastic, I would strongly advise that you wait until they have jobs sorted first - what if you end up buying them a property and they need to move to the other end of the country for a job? The house would then present an unnecessary burden.

[Deleted User]

My parents/grand parents gave me 20K towards my home. Within the terms of the mortgage, that 20k is still theirs until the day that me and my girlfriend marry - until then it's an interest free loan. If we sold the property before then, the money must be returned to them and property split 50/50.

Granadalad

Thanks for useful comments. I'm thinking ahead really Catmeister, so I share your caution about waiting until they've graduated, thought about jobs and decided where they are going to live. There's no certainty that they'll choose to be anywhere near me!

RHemmings

Granadalad wrote:

My thinking is they both reap the benefits of any house price inflation, but I recover my money if the relationship dissolves. In fact my son might "gift regular monthly payments to his sibling (already mortgaged) so they equally enjoy the benefits of my generosity" without paying tax. If I can afford it, I'd rather do this now rather than wait for any inheritance.

This assumes that over the medium term there will be house price inflation. What happens if the prices of property goes down?

ashcarrot

Ignoring Tax implications (I dunno if there is any) summing up issues would be

Don't know where their jobs will be (The best jobs unless you already live in a city) is going to be London, M3/4 corridor or another major city so their likely to have to move.
Don't know how long it would be for them to be employed (I've seen so many of my friends not get "proper" jobs after a degree)
Don't know how much they would earn, if they are forced to get a supermarket job etc is that going to be a major problem with the house purchase?
If your relying on house inflation you could be in trouble if their a crash or correction which people believe is likely medium term.