Helping son with deposit - help please

Ladygolfer62

Hi.
Our son is looking to buy his first property and we want to help him get onto the property ladder.
He has looked at new build properties as this would give him access to the Government's 20% help to buy scheme, but apart from the fact that properties in his price range (with this 20%) are tiny, having to service an additional 20% in five years time when mortgage rates will probably have risen is too risky to contemplate.
He has saved hard and has more than the 10% deposit for the home he is looking to buy but he wants to keep money aside as it needs some substantial work.


We have money sitting in an ISA which isn't earning a lot of interest and would prefer to lend him the money to increase his deposit and reduce the amount of mortgage he would need. I am led to believe that we may need to enter into a declaration of trust rather than give him a formal loan as lenders don't appear to like parents lending them money (but its ok from Government??).


We wont be looking for any interest and will only look for repayment if he sells the house. We want to protect our investment in case of any future relationship/marital breakdown (he is currently single so its not that we have doubts about a current partner) or future changes that could give the student loan company the ability to claim against any equity in his home.
Has anyone been through this and have any advice? Many thanks

csgohan4

some lenders accept loaned deposits, but will need a good broker to look at options

Comms69

You misunderstand, lenders don't like people having an interest in the property


Very few would agree to this, and the rates would be higher


Basically either gift it to him, or don't do anything.

pjcox2005

Will need to wait on one of the brokers to say if they're any good but would a family offset mortgage like these work:


https://familybuildingsociety.co.uk/Mortgages/FamilyMortgage/FM_offset-account_how-it-works.aspx?gclid=CjwKCAjw-8nbBRBnEiwAqWt1zV2HRFLRUI_nTTpZhE7eV6iqArYoyqgu1-80VDLClg9veiRBdJ2H7hoCGDMQAvD_BwE


https://www.barclays.co.uk/mortgages/family-springboard-mortgage/?campaign=Google_Brand-Barclays-First-Home-Exact&chnnl=PSB&gclid=CjwKCAjw-8nbBRBnEiwAqWt1zV9BW2vEhJG8fvRbS6cR8EC8ozel_PfNybnKj0PZ1KTQNHUCs_7KVxoCm7EQAvD_BwE&gclsrc=aw.ds


Expect the actual mortgages may be at a higher cost but worth exploring as that seems to offer more protection for you on the money "lent"

Pixie5740

No, it's not a declaration of trust you need unless you're thinking about jointly purchasing the property with your son. Some lenders will accept a borrowed deposit though.

Why do you think the student loans company would be able to claim any of the equity in his home?

madvicker

Some lenders will accept you having a second charge on the property, with them as the first charge. You would need to have the terms of the loan written and agreed to so the lender's underwriters will have something to refer to. It would limit his choice of lender, but is possible.