What's the best way for me to get a deposit for my son?

6 Posts

My graduate son (24) is about to start work for a blue chip company in York. He had planned to rent a flat (roughly £650 per month) but we're now talking about him buying a two bedroom terrace, which would cost about £200,000 and renting out a room to another young professional. This would halve the cost of his £850 (approx) mortgage We're very concerned about the soaring houses prices in York and think it is a good idea to get him on the property ladder.
But I would need to give him the £20,000 deposit and I don't have that amount of spare cash lying around. I'm 59 and debt free (apart from a small amount on my credit card) and I paid off my own mortgage years ago. I receive a widow's pension, a teaching pension and also have a lucrative second career that provides me with a very high level of monthly income. I am confident that most money lenders would give me a short term loan of £20,000 once they see my tax returns but I am not sure where to turn. I also know that he will pay me back - plus interest. His father died years ago, and at some point in the future he is due to inherit a significant amount from his elderly paternal grandmother.
My questions are these: where is the best place for me to turn to get £20,000 I would need for his deposit? Would a mortgage company still consider loaning the amount to me even though I've now repaid my own mortgage? And can you see any pitfalls with this approach? Any advice will be gratefully received.
He had always planned to wait until he received his inheritance before moving onto the property ladder, and for this reason neither of us had ever discussed the issue before. But things are changing so fast in the property market and the rents in York are high.
But I would need to give him the £20,000 deposit and I don't have that amount of spare cash lying around. I'm 59 and debt free (apart from a small amount on my credit card) and I paid off my own mortgage years ago. I receive a widow's pension, a teaching pension and also have a lucrative second career that provides me with a very high level of monthly income. I am confident that most money lenders would give me a short term loan of £20,000 once they see my tax returns but I am not sure where to turn. I also know that he will pay me back - plus interest. His father died years ago, and at some point in the future he is due to inherit a significant amount from his elderly paternal grandmother.
My questions are these: where is the best place for me to turn to get £20,000 I would need for his deposit? Would a mortgage company still consider loaning the amount to me even though I've now repaid my own mortgage? And can you see any pitfalls with this approach? Any advice will be gratefully received.
He had always planned to wait until he received his inheritance before moving onto the property ladder, and for this reason neither of us had ever discussed the issue before. But things are changing so fast in the property market and the rents in York are high.
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5% but you need to be able to qualify for the 95% mortgage
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I am a Mortgage Adviser - You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
I ask this not to be heartless or unfair to your son, and yes, you know there's an inheritance coming so you can both afford it, but take a realistic look. Someone who has saved nothing has not demonstrated that they can manage money effectively, and is very unlikely to be able to handle the financial responsibility of owning and maintaining a home, and keeping up with repayments. You can double that risk if they also haven't held down a permanent job very long. It is not through being irresponsible, but by having a lack of experience. There is a LOT of learning to be had by living in a rental, getting to grips with your budget and putting away even £100 each month.
Everyone thinks their kid is the exception, but there is a reason that he cannot take out the mortgage on his own. Banks have data on thousands of customers who were in the same situation as him, and they know that the risk of default is too large for them to put their money down. As his parent you're of course willing to take more of a risk because you love him; but don't discount the intelligence of the banks and their caution. Perhaps you could discuss "Plan B" of him renting for 6-12 months, saving a little bit into a deposit, and watching how the market looks.
You probably need to sit down with a broker, there are ways in which this might work but the devil is in the detail.
Also a lot of lender would have issues with the deposit, both in terms of it not being a gift (ie it will be paid back and with interest - thats not a gift by any stretch of the imagination), and some lenders would have an issue that you have taken out a loan to lend/gift to your son.
your options will be slim, but if you get it wrong you could find yourself wasting time and money.
Offer on property 17/02/21
Offer accepted 18/02/21
Mortgage application submitted 22/02/21
Desktop valuation 22/02/21
Mortgage offer received 22/02/21
Solicitor instructed 23/02/21
Draft contract received and enquiries sent 02/03/21
searches back 08/03/21
Enquiries back 10/06/21
Exchanged 23/06/21
I’m a Forum Ambassador and I support the Forum Team on the 'Mortgages & Endowments', 'House Buying, Renting & Selling' and 'Mortgage-free Wannabe' boards. If you need any help on these boards, do let me know.
Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.
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I am a Mortgage Adviser - You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
I think the question is, are you wanting to buy a house or is it your son? Using your FTB status on a house you regret buying is not the best start
G_M/ Bowlhead99 RIP