Helping daughter onto property ladder

philip1988

My daughter has recently married and I would like to give her £50K next year to enable her to get onto the property ladder when an insurance policy matures.
It would be fair to say that her chosen husband wouldn't be our first choice and whilst being pessimistic I want to safeguard the money for her should the marriage not last. I was thinking of drawing up a loan agreement ( I have no intentions for her to repay the money) so that the money would be taken out of the equation in any financial arrangement. Currently there are no children involved.
My question is do you think that this is the best way to safeguard the money and if so could I draw up an agreement which my daughter and I sign or should I involve a solicitor.


thank you for your help

LannieDuck

Ohh, this seems like a potentially thorny problem. I would definitely consult a solicitor, esp with such sums involved.

scorpioyorks

You can get a free 30 minute consultation with some solicitors, I have also found the citizens advice bureau helpful, so it might be worth contacting them for advice.

I am no expert on mortgages but there are some available where you can gift a deposit to friends and family and as long as there are no defaults you get the money back after 1 to 3 years. It would help your daughter get on the property ladder and also hopefully keep the money safe.

Person_one

If the money is a loan, it will affect any mortgage they apply for.

If the money is a gift, then once they've been married a couple of years it won't matter how you try to protect it, it will rightly belong to both of them.

You might have to either trust your daughter's judgment and accept that she's married who she has, or realise that you can't help her without also helping him so spend the money on yourselves, or put it away for in case she divorces! If they do separate I bet she'd be really glad of 50K shortly after!

Toto

I presume they are renting at the moment? If so, I would do exactly what person one says. Leave them to rent for a couple of years, that way you can see if the marriage is likely to last for more than 5 minutes. If it does, you can help them onto the property ladder then. If not you have safeguarded the money and can use it to help your daughter if the marriage dissolves.

scorpioyorks

The gifted deposit is kept in a separate account and the lender (the op in this case) gets it back if there are no defaults on the mortgage. If there are defaults you wouldn't get the money back. Below is the info about the mortgage it is called the barclays family springboard (I searched for friends and family mortgages. I think the renting idea is a good idea, but haven't they lived together before getting married?

To bag this 5% deal, you'll need guarantors to put up cash, which will be lost if you fail to repay your mortgage.
Your family has to put savings equal to 10% of the purchase price into a Barclays Helpful Start savings account. No withdrawals are allowed for three years.
The Helpful Start savings account pays the Bank of England base rate plus 1.5%, which currently means getting 2% interest before tax. This is not a lot of interest, considering the long tie-in period.
If your family can put up with a potentially far longer period without its savings, it would be much, much better for you all financially if they simply added the money to your deposit. You'll then pay less mortgage interest due to getting a lower interest rate and having a smaller debt. This more than makes up for the lost savings interest of 2%.
Alternatively, your family could lend you less than 10% cash and still help you onto a 90% mortgage (with a 10% deposit). You might end up with a higher interest rate, but they could then put the rest of their savings to better use elsewhere.
http://uk.finance.yahoo.com/news/barclays-family-springboard-buy-house-102248855.htm

clearingout

there are trust declaration things that can be drawn up as an agreement should something happen to the couple - essentially it would say that if you put in £50k, you get £50k out and the rest is split as per mediated agreement or court order should you separate/divorce. It is quite common for people to enter marriages with a significant sum in their own right and those of us who have been bitten once, know how important it is to safeguard what we have as best we can because the worse can and does happen. You will need to see a solicitor to get it drawn up properly. Alternatively you could register a charge against the property when it is bought but I'm not aware of what the pitfall of this may or may not be - negative equity is potentially a problem with both solutions.

I am pretty sure you can't draw up a loan agreement but not ask for the money to be repaid 'cos a judge would look at that in a divorce situation and recognise it as what it is - a gift. If you are investing this much, it would be worth an extra £1k to get the legal advice you require to make it as tight as possible. I personally believe you are right to be cautious - the statistics on marriage aren't particularly encouraging and having been in what I considered a solid marriage and had it fall apart overnight, sometimes having a person with a cynical head on them hanging about is what is needed! If it never happens, it's not a problem, is it?

LEJC

Although its not just the husband who could fail...the property could lose value too...and the equity is lost that way

Judgement aside on her choice of husband...(and I'm sure my family had similar thoughts on his suitability and sustainability when after 6 weeks of dating a guy we decided to get married....)....if you want to help your daughter then do so unconditionally.

I'm still very happily married by the way after 20 years!!

minnie123

I had the same issue my father gave me some money for a joint house purchase we had a declaration of trust drawn up by a solicitor.

BugglyB

If you insist on having this drawn up you are belittling your daughters choice of partner and infantalising her.

I know it 'makes sense' looking at it objectively but I'd urge you either not to do it, or to do it unconditionally.

SmallL

How long has your daughter and partner been together?
Do you trust your daughters judgement on his character?