Posted on: April 1, 2025
How Parents Can Help Their Children To Buy Their First Home
With property prices rising, getting onto the property ladder has never been more challenging for young people to buy their first home. Fortunately, there are several ways that parents can lend a helping hand to their children in purchasing a house.
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Financial Contributions:
Parents can directly contribute funds towards a house deposit via a gift. This can significantly reduce the loan amount and monthly repayments. However, it’s crucial to understand the legal implications of this transaction, such as the potential impact on inheritance tax and gift taxes.
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Joint Mortgages:
Parents and children can take out a joint mortgage. This increases the total household income assessed by the lender, thereby potentially increasing the borrowing capacity. It’s important to have a clear understanding of the responsibilities, liabilities and financial costs involved in joint mortgages.
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Family Offset Mortgages:
Parents can place their savings into an offset account linked to the child’s mortgage. The savings reduce the mortgage interest, making it easier and quicker to pay off the mortgage. Unlike gifting money, the savings remain in the parents’ names.
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Providing a Living Space:
Allowing children to live at home rent-free or at a reduced rent rate can help them save more money towards a deposit.
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Financial Education:
Parents can educate their children about budgeting, saving, and managing credit. Understanding financial management is crucial for making informed decisions about purchasing and maintaining a home.
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Seeking Professional Advice:
Encouraging children to seek advice from mortgage brokers, financial advisors, and solicitors ensures they understand their options and make the best decision for their situation.
Buying a house is a significant financial milestone, and with the right support and guidance, parents can play a pivotal role in helping their children achieve this goal. Each method comes with its own set of benefits and risks, so it’s essential to consider all options carefully and seek professional advice where necessary.
We hope this article helps you understand how you can help your children to buy their first home. If you have any more questions or need further assistance, feel free to get in touch.
Craig Power craig.power@villagefs.co.uk or Luke.spires@villagefs.co.uk.
the information contained within was correct at the time of publication but is subject to change. 01.04.2025
Your home may be repossessed if you do not keep up repayments on your mortgage.
