Deposit to help daughter buy a house

GBP_2

My wife and I would like to help our daughter get a foot on property ladder.

We have a large house with a small mortgage soon to be paid off and will have a very good pension in 8 years (early retirement) or even larger one in 17 years (usual retirement age).


We would like to help Our daughter get a foot on property ladder (she is 23) and will do the same for our son in 4 years (when he is 23).

If we remortgage our house and "gift" our daughter, she will be able to afford a 2 bed flat.

I have done some reading and have posted on here at earlier date which has helped narrow question/focus.

1) How is it best to gift the deposit so she can get a mortgage (will only be a very low LTV for her then.

2) Is there a way to create a second charge to help protect our substantial deposit whilst still meaning she can get a mortgage?

3) Is there a way to create an interest free loan so we could get back some/all if we ever needed it - don't expect too due to good pension coming in 8-13 years but never know

4) where she will buy will be good investment even if she moves it will most likely be worth more money in near future or is very rentable and thus is a sound investment - as much as anything is at present

the deposit to her will be large and allow her to move out of high rent properties but luckily will not be too much compared to our property value, hence we are quite relaxed about it.

SuboJvR

I don't know all the ins and outs of what lenders will accept with regard to a "gifted" deposit/second charge etc...

However if you don't want to gift the deposit but rather lend it, I'd consider if you think that's really wise. If you needed that money, could you get it? I'd be inclined to think about how much deposit you could genuinely give your daughter, and keep the rest for yourselves, or for your son later.

Let her investigate what sort of mortgage she could pay, e.g. compared to what she pays for rent. Does she need to have a "very low" LTV mortgage? Of course this is desirable, but if she could afford something a bit higher - she's young, after all, plenty of time to pay it off - may this not offer you more security?

ACG

1) It makes no odds, you can do it sooner rather than later or do it a couple of days prior to completion or any time in between.

2) A gift usually has to be without reservation (ie no strings attached), some lenders will allow some sort of agreement in the background, but very few. You could potentially do it all after the mortgage completes, but your daughter is then technically committing mortgage fraud, by withholding information that may alter the outcome of the application and lying on the gifted deposit letter.

3) Yes, but again this will affect the options open to your daughter. It will also be then classed as a commitment and in turn reduce the amount she can lend.

I dont mean this to come across in any sort of negative way, but if you are gifting your daughter the money - gift it. If you are lending it or wanting the option of getting it back in the future, then dont.

Mojisola

GBP wrote: »

We would like to help Our daughter get a foot on property ladder (she is 23) and will do the same for our son in 4 years (when he is 23).

There's a lot can happen in four years.

If you can, work out how to secure the money for your son now.