Advice please regarding helping your children onto the housing ladder.

amistupid

I'm considering helping one of my kids and their partner with a 'loan' to increase the deposit on their first house.

The chances are I'll never recall the 'loan', but if their relationship fails is there any legal way I can safe guard my contribution from being split between them?

I've done some research on the internet and it seems a deed of trust maybe the answer, but to have one, would I have to be a tenant in common?

ACG

I can only think of 1 lender who would accept a loan as a deposit.
Most lenders would need it to be a gift and for you to sign paperwork that it is not repayable. So your loan regardless of whether its likely to be repaid or not, is unlikely to be acceptable to all but a minority of lenders.

Thrugelmir

Gift the money to your "kid". Ensure that they enter into a declaration of trust to with the other "kid". You'll need to consult the solicitor handling the purchase to have a declaration of trust drafted.

amistupid

Thrugelmir wrote: »

Gift the money to your "kid". Ensure that they enter into a declaration of trust to with the other "kid". You'll need to consult the solicitor handling the purchase to have a declaration of trust drafted.

This gets more and more complicated.

Will continuing down this route, limit lenders?

Edit:

It all looked so straight forward on this http://www.money.co.uk/article/1004232-how-can-i-help-my-children-buy-their-first-house.htm

Thrugelmir

Not complicated at all.

A Declaration of Trust is commonly used in house purchase. Where the partners have unequal shares of the deposit at the outset. In the event of relationship breakdown. It ensures that the property's equity is divided in the prescribed form. A DoT is a legally binding agreement.

You will have to give your kid the money without reservation i.e. a gift. To be acceptable to lenders.

enthusiasticsaver

We helped both our daughters with a £20k deposit each so they could buy properties. Our younger daughter was in a relationship and in fact did marry her partner last year but we still gave the gift unconditionally. Some might view this as naïve on our part as she was able to provide most of the deposit for their house but he has a larger salary so is contributing more to the mortgage. Getting involved with "deeds of trust" just complicates the matter as many banks and building societies do not seem to like them.

Thrugelmir

enthusiasticsaver wrote: »

Getting involved with "deeds of trust" just complicates the matter as many banks and building societies do not seem to like them.

Lenders have no interest in DoT's. As have no bearing or impact on the lenders interest in the property. They are a private matter between the purchasing parties.

enthusiasticsaver

Thrugelmir wrote: »

Not complicated at all.

A Declaration of Trust is commonly used in house purchase. Where the partners have unequal shares of the deposit at the outset. In the event of relationship breakdown. It ensures that the property's equity is divided in the prescribed form. A DoT is a legally binding agreement.

You will have to give your kid the money without reservation i.e. a gift. To be acceptable to lenders.

This would only work though if both parties were putting in equal amounts to the property after it being purchased. As we all know investment in property doesn't stop once it is bought. Once you go down the path of weighing up each individual's contribution in the event of something going wrong where does it stop? Do they get amended declaration of trusts if one of them gets a payrise and ends up contributing more to the marital coffers?


In my daughters' case she was providing 80% of the deposit for their house by virtue of our gift to her but her husband earns twice as much as her so contributes more to the monthly mortgage payment, bills, home improvement costs etc. All their accounts are joint so she considers that their savings/gifts pots should also be considered as joint. We were ok with that.

amistupid

enthusiasticsaver wrote: »

We helped both our daughters with a £20k deposit each so they could buy properties.

A friend of mine did similar, unconditionally gave a large sum to his son for a house deposit. Five years later his son's relationship broke up and his partner got half the deposit.

At present my 'child' would be the only one contributing to the deposit and the mortgage repayments. Hopefully they'll live happily ever after, but just in case they don't, I don't see any harm in trying to protect my gift.

amnblog

A mainstream lender offers a product where you daughter can put down 5% of the purchase price cash and you can put 10% into an account held in your name on which you receive interest.

Provided the mortgage is paid in full and on time you get your full 10% back after 3 years.

Your daughter gets a good interest rate and you do not let your money go and be at risk from the partner.

PM me if you want a link to the details.

getmore4less

Barclays and YBS both have products that can use protected family money

http://www.barclays.co.uk/Mortgages/FamilySpringboardMortgage/P1242627640100

http://www.ybs.co.uk/mortgages/offset/offset-plus.html


there might be others