best way to help daughter?

Cerys1969

My 23 year old daughter is renting has next to nothing savings and wants to move back home to save for her mortgage deposit. This could take 2 years! We would prefer to get her on the property ladder sooner rather than later....

Is it possible to do the following:

Option 1
1) We use cash savings to buy her first small home outright but put in her name. She is mortgage free for 1-2 years so saves a deposit (plus a little from me) and then takes out a 75% mortgage on the property? She also plans to rent a room out to a friend so she would be able to save faster. But not sure how we get the cash back out?

Option 2
1) We use our cash savings for the deposit (we have agreed to pay some of this as a gift but not all). She gets a mortgage (again at 75% LTV) and then saves to pay us back part of the deposit. Issue is that I am not sure how quickly she could pay us back the balance of the deposit in this scenario.

Option 3
We pay the depoit for now. We look at a family offset mortgage...and do this for 2 years...again it would keep repayments very low and she can save to pay us back the deposit. After 2 years she switches to her own mortgage...so we can go back into investing our cash for our future.

any advice?

Thanks

HappyMJ

If you lend her the money she has to declare it to the mortgage company which may not lend as much as they would otherwise. If you give the money to her with no conditions attached then the mortgage company will see it as a non-repayable gift. You can ask for the money back but she won't be obliged to pay any if she doesn't want to.

By the sounds of it she is finding it difficult to save due to high rent. You could suggest she become a lodger in someone elses house to reduce her rent payment or you could offer her a room at a greatly discounted amount.

As for the council and housing benefit they don't pay the rent for anyone living alone who is aged under 35 any more. They will only pay enough to pay the rent to live in a shared house.

19lottie82

My mother helped me with a flat deposit after receiving an inheritance.

She "gave" me 25% of the property price, but the agreement is that she owns this share of my flat and if / when I sell it then I will repay her.

We told my IFA where the deposit came from and the mortgage provider (Halifax) didn't even ask.....

Gary123456790

Hi,

Speaking as someone who is on "the property ladder" we have seen the value of our house fall and enjoy paying mortgage interest, council tax, stamp duty, etc etc.

Having a house does not mean you are in a better position to get a bigger one in the future. Each time you move it costs you thousands in fees to estate agents, solicitors, stamp duty etc.

Renting a room in someone else's house whilst saving to go straight to rung 2 on the ladder (and saving thousands in the process) rather than paying out whilst on rung 1 sounds much better!

Gary.

The_J

HappyMJ is partly right.

Option 1: Very nice of you, you are risking the property price falling in the future. You could ask your daughter to pay you "interest" for living there whilst it's in her name then she could remortgage in 2 years time.
Pros: You get income from your savings, your daughter isn't spending as much, you get your money back.
Cons: She might find it difficult to raise money to pay you back in the future. I would say this is low risk though. Potential IHT liability for the money gift?

Option 2: You would have to gift the whole of the deposit really (i.e. say that you won't be wanting any of it back). Most lenders look at this fine. If you have an informal agreement to pay that money back then that is perfectly fine.
Pros: You use less of your savings in the short term.
Cons: Your daughter marries a rocker and runs away with your money.

Option 3: Pain in the !!!. Additional legal fees in the future. I wouldn't bother.