Helping your child onto the property ladder- Good idea or not.

Legacy_user

Please can anyone advise?

My husband and I, have a small mortgage over five years, house valued at £220,000. Our oldest child is 21 years old, still lives with us. has a Help to Buy account and saves £200 a month.

We are trying to discover which is the best way forward to get our child onto the property ladder. Our child will be self-employed after Christmas and this might be an issue as he can’t provide future guaranteed earnings, although he has completed an apprenticeship for four years without gaps in earnings.

4) Is this a good idea, or not - Buying a property together (my husband and I as one half ownership and our child as the other half), our children live in it for say, five years or so (on a fixed mortgage). Probably no profit but don't want to make a loss. Our child will have had independence and hopefully have a step on the property ladder with the small profit. We saw an empty local detached property for £110,000, liveable but needs modernising, with a neighbouring property up for sale for £ 170,000 although it had a kitchen extension but didn’t have an attached garage like the one we are considering buying, so there could be some profit to be made.


5) I guess my main question is, Is this the best way to help our child to get onto the property ladder, or is there another way? Could we even get a mortgage? Could our child get a mortgage and we get a loan? Are there any other possibilities?


6) Is he better off saving and stopping at home until he meets a partner, which I don’t think will be any time soon and we are a little overcrowded?

Thank you for your time.

Cornucopia

- It's unlikely that your son will get a mortgage on the property you are suggesting, based on his salary. Why that property, particularly? Would a flat be cheaper, more suited as a young person's first home?

- You would need to take specialist advice on obtaining a mortgage to buy the property yourselves. A BTL will not be suitable (no close relatives allowed).

- The most straightforward/sustainable approach is probably for you to gift him a deposit and then for him to buy a property he can afford. Then do the same for your other child (possibly based on your son paying back some/all of the gifted amount).

marksoton

Cornucopia wrote: »

- The most straightforward/sustainable approach is probably for you to gift him a deposit and then for him to buy a property he can afford. Then do the same for your other child (possibly based on your son paying back some/all of the gifted amount).

Paying back the gift....?

Cornucopia

Gifting it back?

How it's expressed depends on the Lender's view of these things and how the figures work out.

[Deleted User]

It sounds like your son is quite young.., and his earnings will be quite low. I realise house prices are rising all the time but it might be best to wait for him to establish himself. There is a reason most mortgage companies want 3 years completed accounts before they will consider a self employed person for a mortgage.

If things go wrong, it could leave you not only having to pay your mortage but his as well if things go wrong for him or he doesn't react well to financial pressure (which is something most people are under when starting as self employed) - to protect your investment. Even if you decided to sell immediately, you could easily be covering the mortgage for 6 months. And if he (as a 50% owner) didn't want to sell, then there'd be a lot of hassle with the courts to force him to sell.

I know this is all worse case scenario.., but it does happen.

moneyistooshorttomention

marksoton wrote: »

Paying back the gift....?

Okays - loan then. But OP would have to be very sure that, one way or another, they could definitely manage to give equivalent help to the 2nd child (to ensure fairness).

I would think that - whatever way they choose to help their first child - they should do it in such a way that if the 1st child lets them down somehow it won't mean that they can't then help the 2nd child (with resulting unfairness). So - a loan doesn't seem a very good idea (as there is a lot of potential for the 1st child to let them down there - even if involuntarily courtesy of losing their job).

glasgowdan

Second child might not need help, might not want to buy a place, might move in with a partner. I'd say that's got nothing to do with this child and situation.

moneyistooshorttomention

None of us can know - but if it's a gifting form of help, rather than a loan form of help - then 2nd child should have the same (if for a different purpose). Their life choices are equally valid - they might not choose to buy a house - but, on the other hand, might decide to do an expensive career change or something.

Davesnave

I wouldn't assist either of my children buy a property, although I'd help them if they were in real financial difficulty.

It's a personal choice, but I believe children strive harder when they know their goal must be achieved solely by their own efforts.

csgohan4

If you want to help your children, don't expect any of the money back, if you do, it will cause problems in the future.


Money and family do not mix.


Treat both your children equally and don't get yourself in debt because of them.


You will be equally liable and could lose your own house if you enter into a mortgage with them and they decide not to pay.

Pixie5740

1) If your son has just started self-employment then he will need to wait until he's got a couple of years accounts under his belt before applying for a mortgage. I think 3 years of accounts are usually required but there might be some lenders out there willing to accept 2 or possibly 1 year depending on deposit, credit history, etc.

2) If you buy a property jointly with your son then you'll pay an additional 3% SDLT on the full purchase price. CGT might be an issue for you if/when your son buys your share off you.

3) Your ages could impact the mortgage term meaning higher monthly repayments.

4) The fact you are not currently in employment could hamper the amount you can jointly borrow.

5) If you want to jointly purchase the property you will all have to be jointly named on the mortgage.

6) Why are the only options buy a detached property or live at home until he finds a partner? A smaller 1 or 2 bedroom property would be a more realistic FTB home.

6) If your home is getting too crowded he could always do what many people do which is rent whilst he saves up a deposit.

7) Is buying now even the right option for your son? When his current contract ends he could find that his next contract takes him away for the area.